PROBLEMS READ CAREFULLY AND ANSWER WHAT IS BEING ASKED FOR SHOW YOUR WORK

1. The Golden Broom Cleaning Service acquired new equipment: Cost $118,400 Residual 12,800 Estimated useful life 8 years or 40,000 units Required: a. Determine the book value of the asset at the end of the THIRD year if the straight-line depreciation method is used. b. Determine the depreciation expense for the SECOND year assuming double-declining balance method is used. c. What would be the depreciation expense for the FIRST year if the units-of-production method is used and 6,000 units were produced?

2. Grinder Enterprises purchased machinery on January 1, 2013, at a cost of $270,000. The machinery has an estimated useful life of eight years and $6,000 residual value. Grinders income, excluding depreciation and income taxes, for 2013 was $750,000. If Grinder has a 40% income tax rate, determine the amount of income tax expense and net income it will report, using the Required: a. straight-line method b. double declining balance method

3. Selected information for two companies is presented below: Pure Cane Sugar Ortho-Dental Co. Sales $6,000,000 $6,000,000 Total Expenses 3,500,000 3,500,000 Fixed costs 1,550,000 2,700,000 Variable costs 1,950,000 800,000 Required: a. Calculate net income for each company. b. Suppose sales decreased by 15%. Which company will report the highest net income? Why? c. Suppose sales increased by 15%. Which company will report the highest net income? Why?

4. Santiago Company reported the following items in its financial statements: 2013 2014 Sales $ 937,500 $1,125,000 Net income 75,000 135,000 Total assets 3,750,000 4,500,000 Required: Compute asset turnover, profit margin, and return on assets for each year.

5. Information is provided below for two companies for 2013 Corelle Padron Total assets $160,000 $300,000 Sales 140,000 540,000 Fixed costs 70,000 378,000 Other expenses* 42,000 108,000 Net income $28,000 $54,000 * Vary in proportion to sales Required: a. Compute profit margin, asset turnover, and return on assets. b. Compute profit margin, asset turnover, and return on assets for both firms if sales increased by 10%. c. Compute profit margin, asset turnover, and return on assets for both firms if sales decreased by 10%. 1.

6. Flextronics Corporation sold merchandise with a sales price of $20 million during 2013. Flextronics allowed its customers $4 million of quantity discounts. Flextronics expects a return rate of 6% of the amount billed, which is net of the discount. How much revenue (after discounts) should Flextronics report for 2013?

7. The following inventory information is available for Donaldson Company: Units Unit cost Total cost Beginning inventory 400 $56 $22,400 Jan. 14 purchase 1,000 66 66,000 Jan. 25 purchase 1,000 70 70,000 Ending inventory 600 Required: Fill in the table below (assume periodic inventory method). FIFO $ LIFO $ Weighted average $ Ending inventory Cost of goods sold

8. Seaside Ventures began 2013 with $150,000 of raw material inventory, $430,000 of work-in-process inventory, and $128,000 of finished goods inventory. During the year, Seaside purchased $700,000 of raw material and used $780,000 in production. Labor used in production during the year was $840,000. Overhead was $1,120,000. Cost of goods completed was $3,120,000 and cost of goods sold was $3,040,000. Required:

Prepare a schedule to determine ending balances for raw material, work-in-process, and finished goods inventories.