Quiz 7_10-14_10-1B_10-2B_10-3B_Zander Co_Layton company_Waylander Coatings Company_wholesale ceramic_Sandblasting equipment Answer
1) Zander Co. began the year with an inventory balance of $1,200 (40 units). Purchases and sales throughout the year were as follows:
Purchases: Units Unit cost 01-Mar 40 $32
01-May 35 32
01-Aug 35 34
01-Oct 45 30
01-Dec 50 35
Sept. 14 40
Required: Calculate Cost of Ending Inventory and Cost of Goods Sold using the following methods:
1. FIFO Perpetual (as of March 30)
2. LIFO Perpetual (as of September 30)
3. Average Cost Periodic (as of December 31); round and use average unit cost to the nearest cent.
2) Layton company purchased tool sharpening equipment on Oct1 2012 for $108000. The equipment was expected to have a useful life of three years, or 12,000 operating hours, and a residual values of $7200. The equipment was used for 1350 hours in 2012, 4200 hours 2013, 3650 hours in 2014 and 2800 in 2015.
Determine the amount of depreciation expense for the years ended Dec 31,2012,2013,2014 and 2015. by (a) the straight line method, (B) the units of output method, and (c) the double declining balance method.
3) PR 9-2B Comparing three depreciation methods
Waylander Coatings Company purchased waterproofing equipment on January 6, 2013, for $320,000. The equipment was expected to have a useful life of four years, or 20,000 operating hours, and a residual value of $35,000. The equipment was used for 7,200 hours during 2013, 6,400 hours in 2014, 4,400 hours in 2015, and 2,000 hours in 2016.
1. Determine the amount of depreciation expense for the years ended December 31, 2013, 2014, 2015, and 2016, by (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method. The following columnar headings are suggested for recording the depreciation expense amounts:
Year Straight-Line Method Units-of- Output Method Double-Declining- Balance Method
2. What method yields the highest depreciation expense for 2013?
3. What method yields the most depreciation over the four-year life of the equipment?
4) The following payments and receipts are related to land, land improvements, and building acquired for use in a wholesale ceramic business. The receipts are identified by an asterisk.
A) Fee paid to attorney for title search……..$3,600
B) Cost of real estate acquired as a plant site: Land…….$720,000
c) Finder fee paid to real estate agency …………..23,400
d) Delinquent real estate taxes on property, assumed by purchaser……..$15,000
E) Architect’s and engineer’s fees for plans and supervision……….75,000
F) Cost of removing building purchased with land in (b)……………. 10,000
G) Proceeds from sale of salvage materials from old building………$3,400*
H) Cost of filling and grading land………18,000
I) Premium on one-year insurance policy during construction…….8,400
J)Money borrowed to pay building contractor……..800,000*
K) Special assessment paid to city for extension of water main to the property…13,400
L)Cost of repairing windstorm damage during construction…3,000
M)Cost of repairing vandalism damage during construction….2,000
N) cost of trees and shrubberry planted………………..14,000
O) Cost of paving parking lot to be used by customers……..21,600
P)Interest incurred on building loan during construction………….40,000
Q)Proceeds from insurances company for windstorm and vandalism damage…4,500*
R)Payment to building contractor for new building……………..800,000
S)Refund of premium on insurance policy (i) canceled after 10 months…..1400*
1)Assign each payment and receipt to Land (unlimited life), Land Improvements, (limited life), Building, or Other Accounts. Indicate receipts by an asterisk. Identify each item by letter and list the amounts in columnar form, as follows:
2)Determine the amount debited to Land, Land Improvements, and Building.
3)The cost assigned to the land, which is used as a plant site, will not be depreciated, while the costs assigned to land improvements will be depreciated. Explain this seemingly contradictory application of the concept of depreciation.
5) Sandblasting equipment acquired at a cost of $36,000 has an estimated residual value of $6,000 and an estimated useful life of 10 years. It was placed in service on April 1 of the current fiscal year, which ends on December 31. Determine the depreciation for the current fiscal year and for the following fiscal year by (a) the straight-line method and (b) the double-declining-balance method.
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