Reference no: EM132918158
Exercise 1. Cost of goods sold
Música y Más had an inventory of guitars and other musical instruments. Using the FIFO method and the perpetual inventory system, the company recorded initial inventory, purchases, and sales.
a. Determine the cost of merchandise sold and the value of the inventory.
Date Detail Quantity Unit cost (unit cost)
May 1 Starting Inventory 15 $ 91
6 Sale 6
8 Buy 15 95
13 Sale 4
30 Sale 5
Exercise 2. Perpetual inventory record
Electronic Equipment and Much More had an inventory of computers. Using the LIFO method and the perpetual inventory system the company recorded the initial inventory, purchases and sales.
a. Determine the cost of merchandise sold and the value of the inventory.
Date Detail Quantity Unit cost (unit cost)
May 1 Starting Inventory 15 $ 125
6 Sale 5
8 Buy 10 110
13 Sale 4
30 Sale 2
Exercise 3. Perpetual inventory record
Música y Más had an inventory of guitars and other musical instruments. Using the average inventory method and the perpetual inventory system, the company recorded beginning inventory, purchases, and sales.
a. Determine the cost per unit and the cost of merchandise sold.
Date Detail Quantity Unit cost (unit cost)
May 1 Starting Inventory 10 $ 82
6 Sale 5
8 Buy 15 83
13 Sale 3
30 Sale 6
HELP 2: Fixed asset transactions
Perform the following fixed asset transaction exercises.
Part 1
Read the following case and record the transactions and the corresponding adjustment entries:
At Caribe Music, a company dedicated to the sale of music equipment, there have been the following transactions and adjustments in the past two years. The transactions are related to the use of the shipping equipment. The depreciation method was the double declining balance.
First year Transaction
February 6 A used delivery truck was purchased for cash for $ 45,000.
July 7 $ 700 paid for truck repairs.
December 31 Record the depreciation of the truck for the calendar year. The truck had a useful life of 3 years. The truck had a residual of $ 5,500.
Second year
January 8 A new truck was purchased for cash for $ 55,000.
June 10 Maintenance and repairs were performed on the truck for $ 725.
July 9 Paid $ 250 for repairs to the used truck purchased in the first year.
September 19 The truck that was purchased in the first year for $ 20,000 was sold. Record the depreciation as of the date the truck is sold.
December 31 Records the depreciation of the truck purchased in the second year. The truck has a useful life of 5 years. The truck has a residual of $ 7,200.
Part 2. Turnover ratio of fixed assets
Read the following case and compute the fixed asset turnover ratio.
Explain in own words how the result of the turnover ratio of both companies is interpreted.
La Flor de Mayo and La Rosa del Monte compete in the moving service sector. The greatest assets of these companies are moving trucks, warehouses and technological equipment. Sales and the average book value of fixed assets (book value) reported in the latest financial statements of each company is as follows:
The Flower of May The Rose of the Mount
Sales (in millions) $ 12,320 $ 15,500
Average book value of fixed assets (in millions) $ 7,000 $ 8,300
Part 3. Book value
Read the following case and calculate the book value of Home Depot's current and prior year fixed assets.
Explain the difference in the book value between the two years.
Home Depot is a distributor of building materials, gardening and kitchen equipment, among others. The following information is from the company's books.
Fixed assets Current year Previous year
Buildings $ 28,300 $ 21,500
Machinery, equipment and computer systems 32,250 22,600
Other fixed assets 6,800 8,200
Accumulated depreciation and amortization (31,500) (23,100)
HELP 3: Depreciation, amortization and depletion
Part 1. Calculate depreciation in the following cases.
La Rosa del Monte has a moving truck that does the big moves in the Miami area and at the end of the year has a balance of $ 88,250 with accumulated depreciation of $ 12,230. He also has a small truck that he uses in the Orlando area for $ 43,760 with accumulated depreciation of $ 7,120.
Determine what the depreciation is for each truck using the depreciation by units of activity method.
Truck Cost Estimated residual value Estimated useful life Accumulated depreciation at the beginning of the year Miles used in the year
Large truck $ 88,250 $ 17,000 230,000 miles $ 12,230 32,000
Small Truck 43,760 6,500 280,000 Miles 7,120 27,300
2) A gamer computer costs $ 3,850 with a residual of 800 and an estimated 5-year lifespan.
Calculate annual depreciation using the straight-line depreciation method.
Make wage entries.
3)A refrigerator in a cafeteria with a shelf life of 8 years cost $ 5,250 and has no residual.
Calculate depreciation using the straight-line depreciation method and the declining balance method.
Make the wage entries for each depreciation method.
4) A sewing machine in a textile factory was purchased for $ 223,000, has an estimated residual of $ 22,000 and a useful life of 38,000 hours. It was used in the year for 4,200 hours.
Calculate depreciation for the year using the unit-produced depreciation method, depreciable cost, and depreciation rate.
Part 2. Calculate amortization and depletion for each transaction.
1) A gold garment production company acquired the rights to a mine for $ 520,000,000. At the mine, there are an estimated 150,000,000 tons of gold. The amount of 50,000 tons was sold in the year.
Calculate the depletion rate and depletion expense for the year.
You must deliver the steps of how you got to the result.
2) A fast food business acquired the copyright to a recipe book for $ 80,000 with a useful life of 15 years.
Calculate amortization. You must present the calculation made.
3) A company pays a patent for $ 98,000 with a useful life of 12 years.
Calculate amortization. You must present the calculation made.