Reference no: EM132956284
(1) On January 1, 2020, we received a $450,000, 3% interest, 3-year note for goods sold. The cost of the goods sold was $275,000. The prevailing market interest rate is 5% at the time the note is received. Interest on the note is due annually on January 1.
(2) A machine which cost $300,000 was acquired on October 1, 2017. Its estimated salvage value is $30,000 and its expected life is eight years. Record any necessary 2020 entries associated with this machine. The machine is depreciated using the double-declining balance method. On May 31, 2020, this machine has a fair value of $190,000 and is exchanged for similar machinery having a fair value of $160,000 and $30,000 cash is received. This exchange lacks commercial substance. The new equipment is depreciated using the double-declining balance method and has an eight year useful life.
(3) Judd Company sells computers for $1,800 each. The cost of the computers was $840 each. During 2020, the company sold 800 computers. 80% of the sales were on account, the remainder of the sales were for cash. Judd also sells an extended warranty for $60 more, which protects the buyer for 2 years. 60% of the sales purchased the additional warranty. All extended warranty purchases were made for cash. During 2020, we spent $4,000 servicing warranties from this year's sales. We estimate that the total cost of servicing these warranties will be $22,500 for 2 years.
(4) Judd Company has ending inventory in 2015 of $500,000, an ending inventory of $605,000 in 2016, an ending inventory of $713,000 in 2017, an ending inventory of $786,000 in 2018, and an ending inventory of $780,000 in 2019. The price index for each year is 100, 110, 115,120, 125 respectively. The price index for 2020 is 130.
Problem 1: Using dollar-value LIFO, calculate the ending inventory that should be reported on the 2020 year-end balance sheet (report it appropriately).
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