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Assignment 2 2

Topics: FIFO and LIFO accounting, Inventory / Pages: 8 (558 words) / Published: May 6th, 2015
BMA 253 Intermediate Accounting
Assignment #2
PART I Directions:
1) Complete the table below.
2) Calculate the estimated bad debts using aging of receivables method.
Age

Balance

1-60 days 61-120 days 121-180 days Over 180 days $80,000

Probability Uncollectible of Default
2%

$70,000

4%

$40,000

8%

$32,000

11%
Total

PART II Directions:
1) Calculate the inventory cost for both periodic and perpetual method LIFO and FIFO using the following information and table below to fill in the shaded areas:
Jan. 5 - purchase 400 pieces of inventory on account at $20 each.
Feb. 10 - sold 100 pieces of inventory with cash. Selling price is $85 each.
April. 25 - sold 30 pieces of inventory on account.
May 7 - purchased 300 pieces of inventory on account at $22 each.
May 21 - sold 20 pieces on account.
June 18 - sold 5 pieces with cash.
June. 30 - physical count of inventory is 545 pieces.
Periodic Method Inventory Subsidiary Ledger:
Date
Jan. 5
Feb. 10
Apr. 25
May 7
May 21
Jun. 18
Total

P.R.
GJ1
GJ1
GJ1
GJ1
GJ1
GJ1

Purchase Qty
Debit
400

Purchase Cost

Sales
Qty
Credit

$20
100
30

300

700

$22
20
5
155

A. Periodic Method LIFO table
Purchase
Unsold quantity
Batch
May 7th batch
Jan. 5th batch
TOTAL
545 pieces

Date
Jan. 5
Feb. 10
Apr. 25
May 7
May 21
Jun. 18
Total

B. Perpetual LIFO Method
Inventory Subsidiary Ledger
Item Name
Purchase
Purchase
Sales
Unit
P.R.
Qty
Value
Qty
Cost
GJ1
GJ1
GJ1
GJ1
GJ1
GJ1

400

300

$20
$20
$20
$22
$22
$22

700
C. Periodic Method FIFO table
Purchase
Unsold quantity
Batch
Jan. 5th batch
May 7th batch
TOTAL
545 pieces

Date
Jan. 5
Feb. 10
Apr. 25
May 7
May 21
Jun. 18
Total

Purchase cost per unit $22
$20

400

300

700

$20
$20
$20
$22
$22
$22

Cost of
Goods Sold

Inventory
Value

100
30
20
5
155

Purchase cost per unit $20
$22

D. Perpetual FIFO Method
Inventory Subsidiary Ledger
Item Name
Purchase
Purchase
Sales
Unit
P.R.
Qty
Value
Qty
Cost
GJ1
GJ1
GJ1
GJ1
GJ1
GJ1

Inventory
Cost

100
30
20
5
155

Inventory
Cost

Cost of
Goods Sold

Inventory
Value

PART III Directions:
Calculate the depreciation based on the information below.
1) ______ A machine was purchased for $50,000 and had an estimated scrap value of $2,000. The machine has an estimated life of 40,000 hours.
In the first year of depreciation, it was used for 8,000 hours. What is the depreciation using the Unit of Production method?
2) ______ A machine was purchased for $50,000 and had an estimated scrap value of $2,000. The machine has an estimated useful life of 8 years.
What is the annual depreciation using the straight line method for the first year?
3) ______ Using question no. 2 above, what is the depreciation for the second year using the double-declining balance method?
4) ______ Using question no. 2 above, what is the depreciation for the third year using the double-declining balance method?
5) ______ A machine was purchased on October 1st for $40,000 and had an estimated scrap value of $2,000. The machine has an estimated life of 40,000 hours. In the first year of depreciation, it was used for 8,000 hours. What is the depreciation using the Unit of Production method?

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