Reference no: EM132668834

Questions -

Q1. Sunshine Corporation purchased a new machine on Jan 4, 2018 for $185,000 cash. The machine has a useful life of five years or of 26,000 hours. After the useful life the machine will have a residual value of $2,000. The machine was used for 3,600 hours in 2018 and 4,500 hours in 2019.

Required:

1. Calculate the depreciation expense for 2018 and 2019 under each of the following methods:

i. Straight-line

ii. Double diminishing-balance

iii. Units-of -production

2. Calculate the carrying amount at the end of 2019 for the machine when the company is using the Straight-line depreciation method.

3. Record the journal entry for the cash purchase of the machine on Jan 4, 2018 and for its depreciation expense for the year ended December 31, 2019 under the units-of-production method.

Q2. Brilliant Company uses the periodic inventory system. The company's beginning inventory and later purchases of inventory during June 2020 were as below:

Jun 01: Beginning inventory, 45 units @ $22 per unit.

Jun 17: Inventory purchased, 80 units @ $28 per unit.

Jun 25: Inventory purchased, 65 units @ $32 per unit.

Brilliant company sold 100 units during the month of June 2020.

Required:

1. Calculate the cost of goods sold and ending inventory for June 2020 using both the Weighted Average cost and First in, first out (FIFO) method.

2. Also record the journal entries for the June 17 purchase of inventory and when 55 units from this lot were sold for $45 each. Assume both purchase of inventory and its sale are on account.