Question 1: ABC Co. has a machine that cost $255,000 on March 20, 2011. This old machine had an estimated life of ten years and a salvage value of $15,000. On December 23, 2015, the old machine is exchanged for a new machine with a fair value of $142,000. The exchange lacked commercial substance. Layne also paid $18,000 cash. Assume that the last fiscal period ended on December 31, 2014, and that straight-line depreciation is used. Instructions (a) Show the calculation of the amount of gain or loss to be recognized by ABC Co. from the exchange. (Round to the nearest dollar.) (b) Prepare all entries that are necessary on December 23, 2015. Question 2: XYZ company purchased merchandise during 2017 on credit for $300,000; terms 2/10,n/30. All of the liability except $60,000 was paid within the discount period. The remainder was paid within the 30-day term. At the end of the annual accounting period, December 31, 2017, 90% of the merchandise had been sold and 10% remained in inventory. The company uses a periodic system. Required: a) Assuming that the Net method is used for recording purchases, prepare the entries for the purchase and two subsequent payments. b) Assuming that the Gross method is used for recording purchases, prepare the entries for the purchase and two subsequent payments. Question 3: Presented below is information related to Zetoro company for the current year. Beginning inventory $600,000 Purchases $1,500,000 Total goods available for sale $2,100,000 $2,300,000 Sales Required: Compute the ending inventory, assuming that: a) gross profit is 40% of sales b) gross profit is 60% of cost c) gross profit is 35% of sales d) gross profit is 25% of cost Question 4: Presented below is information related to ABC company as at 31/12/208. Beginning inventory Purchases Markups Markup cancellations Markdowns Markdown cancellations Sales Cost Retail 200,000 280,000 1,425,000 2,140,000 95,000 15,000 35,000 5,000 2,250,000 Required: Compute the ending inventory at cost as of 31/12/2018 using: a) Conventional retail method b) Cost method