Question 1

Part A

Amalgam uses a perpetual inventory system.

The following is a record of purchasing and sales data for model cars, their most popular product, for March 2020:

Required: Under the FIFO, compute:

a. The Cost of Goods Sold (COGS) on March 8

b. The Cost of Goods Sold (COGS) on March 17

c. The Ending Inventory on March 31

PART B

Amalgam invested in a equipment on January 1, 2018. The cash price was $240,000. Sales tax amounted to $12,000 and freight charges of $7,000 were incurred. The company also paid $8,000 for a 1-year insurance policy. The estimated useful life of the equipment is 5 years, with an estimated residual value of $20,000.

a. Compute the cost of the equipment.

b. Prepare a depreciation schedule for the years 2018 and 2019 only under each of the following methods:

i. the straight-line method and

ii. the double-declining-balance method.

Beginning Inventory: 350@$160 Purchases: \begin{tabular}{llll} \hline Purchases: & 200@$180 & Sales: & \\ \hline March 1 & 200@$200 & March 8 & 300@$275 \\ March 6 & 220@$175 & March 17 & 200@$280 \\ March 12 & 250@$100 & & \\ March 29 & 100@$205 & & \end{tabular}