Week Three Exercise Assignment Inventory1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation. Inventory information for several oil paintings follows. Painting Cost1/2 Beginning inventory Woods $21,000 4/19 Purchase Sunset 21,800 6/7 Purchase Earth 31,200 12/16 Purchase Moon 4,000 Woods and Moon were sold during the year for a total of $35,000. Determine the firm?s a. cost of goods sold. b. gross profit. c. ending inventory. 2. Inventory valuation methods: basic computations. The January beginning inventory of the White Company consisted of 300 units costing $40 each. During the first quarter, the company purchased two batches of goods: 700 Units at $44 on February 21 and 800 units at $50 on March 28. Sales during the first quarter were 1,400 units at $75 per unit. The White Company uses a periodic inventory system. Using the White Company data, fill in the following chart to compare the results obtained under the FIFO, LIFO, and weighted-average inventory methods.FIFO LIFO Weighted AverageGoods available for sale $ $ $ Ending inventory, March 31 Cost of goods sold 3. Perpetual inventory system: journal entries. At the beginning of 20X3, Beehler Company implemented a computerized perpetual inventory system. The first transactions that occurred during 20X3 follow: ?1/2/20X3 Purchases on account: 500 units @ $6 = $3,000 ?1/15/20X3 Sales on account: 300 units @ $8.50 = $2,550 ?1/20/20X3 Purchases on Account: 200 units @ 5 = $1,000?1/25/20X3Sales on Account: 300 units @ $8.50 = $2,550The company president examined the computer-generated journal entries for these transactions and was confused by the absence of a Purchases account.a. Duplicate the journal entries that would have appeared on the computer printout under FIFO & LIFOb. Calculate the balance in the firm?s Inventory account under each method. c. Briefly explain the absence of the Purchases account to the company president.4. Inventory valuation methods: computations and concepts.Wild Riders Surfboard Company began business on January 1 of the current year. Purchases of surfboards were as follows:Date QuantityUnit CostTotal Cost 1/3100$125 $12,500 4/3200$135 $27,000 6/3100$145 $14,500 7/3100$155 $15,500 Total500$69,500 Wild Riders sold 400 boards at $250 per board on the dates listed below. The company uses a perpetual inventory system.Date Quantity SoldUnit PriceTotal Sales 3/1750$250 $12,500 5/1775$250 $18,750 8/10275$250 $68,750 Total400$100,000 Instructionsa.Calculate cost of goods sold, ending inventory, and gross profit under each of the following inventory valuation methods:?First-in, first-out ?Last-in, first-out ?Weighted averageb. Which of the three methods would be chosen if management?s goal is to (1) produce an up-to-date inventory valuation on the balance sheet? (2) show the lowest net income for tax purposes? 5. Depreciation methods. Mike Davis Enterprises purchased a delivery van for $40,000 in January 20X7. The van was estimated to have a service life of 5 years and a residual value of $6,000. The company is planning to drive the van 20,000 miles annually. Compute depreciation expense for 20X8 by using each of the following methods: a. Units-of-output, assuming 17,000 miles were driven during 20X8 b. Straight-line c. Double-declining-balance 6. Depreciation computations. Alpha Alpha Alpha, a college fraternity, purchased a new heavy-duty washing machine on January 1, 20X3. The machine, which cost $2,000, had an estimated residual value of $100 and an estimated service life of 4 years (1,800 washing cycles). Calculate the following: a. The machine?s book value on December 31, 20X5, assuming use of the straight-line depreciation method b. Depreciation expense for 20X4, assuming use of the units-of-output depreciation method. Actual washing cycles in 20X4 totaled 500. c. Accumulated depreciation on December 31, 20X5, assuming use of the double-declining-balance depreciation method.7. Depreciation computations: change in estimate. Aussie Imports purchased a specialized piece of machinery for $50,000 on January 1, 20X3. At the time of acquisition, the machine was estimated to have a service life of 5 years (25,000 operating hours) and a residual value of $5,000. During the 5 years of operations (20X3 - 20X7), the machine was used for 5,100, 4,800, 3,200, 6,000, and 5,900 hours, respectively. Instructions a. Compute depreciation for 20X3 - 20X7 by using the following methods: straight line, units of output, and double-declining-balance. b. On January 1, 20X5, management shortened the remaining service life of the machine to 15 months. Assuming use of the straight-line method, compute the company?s depreciation expense for 20X5. c. Briefly describe what you would have done differently in part (a) if Aussie Imports had paid $47,800 for the machinery rather than $50,000 In addition, assume that the company incurred $800 of freight charges $1,400 for machine setup and testing, and $300 for insurance during the first year of use.

B Week Three Exercise Assignment Inventory 1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation. Inventory information for several oil paintings follows. Painting Cost 1/2 Beginning inventory Woods $21,000 4/19 Purchase Sunset 21,800 6/7 Purchase Earth 31,200 12/16 Purchase Moon 4,000 Woods and Moon were sold during the year for a total of $35,000. Determine the firm's a. cost of goods sold. b. gross profit. c. ending inventory. 2. Inventory valuation methods: basic computations. The January beginning inventory of the White Company consisted of 300 units costing $40 each. During the first quarter, the company purchased two batches of goods: 700 Units at $44 on February 21 and 800 units at $50 on March 28. Sales during the first quarter were 1,400 units at $75 per unit. The White Company uses a periodic inventory system. Using the White Company data, fill in the following chart to compare the results obtained under the FIFO, LIFO, and weighted-average inventory methods. FIFO $ Goods available for sale Ending inventory, March 31 Cost of goods sold Weighted Average LIFO $ $ B 3. Perpetual inventory system: journal entries. At the beginning of 20X3, Beehler Company implemented a computerized perpetual inventory system. The first transactions that occurred during 20X3 follow: 1/2/20X3 Purchases on account: 500 units @ $6 = $3,000 1/15/20X3 Sales on account: 300 units @ $8.50 = $2,550 1/20/20X3 Purchases on Account: 200 units @ 5 = $1,000 1/25/20X3 Sales on Account: 300 units @ $8.50 = $2,550 The company president examined the computer-generated journal entries for these transactions and was confused by the absence of a Purchases account. a. Duplicate the journal entries that would have appeared on the computer printout under FIFO & LIFO b. Calculate the balance in the firm's Inventory account under each method. c. Briefly explain the absence of the Purchases account to the company president. 4. Inventory valuation methods: computations and concepts. Wild Riders Surfboard Company began business on January 1 of the current year. Purchases of surfboards were as follows: Date 1/3 4/3 6/3 7/3 Total Quantity Unit Cost 100 $125 200 $135 100 $145 100 $155 500 Total Cost $12,500 $27,000 $14,500 $15,500 $69,500 Wild Riders sold 400 boards at $250 per board on the dates listed below. The company uses a perpetual inventory system. Date 3/17 Quantity Sold Unit Price 50 $250 Total Sales $12,500 B 5/17 8/10 Total Instructions 75 275 400 $250 $250 $18,750 $68,750 $100,000 a. Calculate cost of goods sold, ending inventory, and gross profit under each of the following inventory valuation methods: First-in, first-out Last-in, first-out Weighted average b. Which of the three methods would be chosen if management's goal is to (1) produce an up-to-date inventory valuation on the balance sheet? (2) show the lowest net income for tax purposes? 5. Depreciation methods. Mike Davis Enterprises purchased a delivery van for $40,000 in January 20X7. The van was estimated to have a service life of 5 years and a residual value of $6,000. The company is planning to drive the van 20,000 miles annually. Compute depreciation expense for 20X8 by using each of the following methods: a. Units-of-output, assuming 17,000 miles were driven during 20X8 b. Straight-line c. Double-declining-balance 6. Depreciation computations. Alpha Alpha Alpha, a college fraternity, purchased a new heavy-duty washing machine on January 1, 20X3. The machine, which cost $2,000, had an estimated residual value of $100 and an estimated service life of 4 years (1,800 washing cycles). Calculate the following: a. The machine's book value on December 31, 20X5, assuming use of the straight-line depreciation method b. Depreciation expense for 20X4, assuming use of the units-of-output depreciation method. Actual washing cycles in 20X4 totaled 500. B c. Accumulated depreciation on December 31, 20X5, assuming use of the double-decliningbalance depreciation method. 7. Depreciation computations: change in estimate. Aussie Imports purchased a specialized piece of machinery for $50,000 on January 1, 20X3. At the time of acquisition, the machine was estimated to have a service life of 5 years (25,000 operating hours) and a residual value of $5,000. During the 5 years of operations (20X3 - 20X7), the machine was used for 5,100, 4,800, 3,200, 6,000, and 5,900 hours, respectively. Instructions a. Compute depreciation for 20X3 - 20X7 by using the following methods: straight line, units of output, and double-declining-balance. b. On January 1, 20X5, management shortened the remaining service life of the machine to 15 months. Assuming use of the straight-line method, compute the company's depreciation expense for 20X5. c. Briefly describe what you would have done differently in part (a) if Aussie Imports had paid $47,800 for the machinery rather than $50,000 In addition, assume that the company incurred $800 of freight charges $1,400 for machine setup and testing, and $300 for insurance during the first year of use