Reference no: EM13569622

BagODonuts Company bought a used delivery truck on January 1, 2010, for $19,200. The van was expected to remain in service 4 years (30,000 miles). BagODonuts' accountant estimated that the truck's residual value would be $2,400 at the end of its useful life. The truck traveled 8,000 miles the first year, 8,500 miles the second year, 5,500 miles the third year, and 8,000 miles in the fourth year.

1. Calculate depreciation expense for the truck for each year (2010-2013) using the:
a. Straight-line method.
b. Double-declining balance method.
c. Units of Production method.
(For units-of-production and double-declining balance, round to the nearest two decimals after each step of the calculation.)
2. Which method best tracks the wear and tear on the van?
3. Which method would BagODonuts prefer to use for income tax purposes? Explain in detail why BagODonuts prefers this method.

ABC Inc. was incorporated on 1/15/12. Their corporate charter authorized the following capital stock:
Preferred Stock: 7%, par value $100 per share, 100,000 shares.
Common Stock: $1 par value, 500,000 shares.

The following transactions occurred during the year:

1/19/12 - Issued 100,000 shares of common stock for $17 cash per share.
1/31/12 - Issued 3,000 shares of preferred stock for $115 cash per share.
11/1/12 - Repurchased 30,000 shares of common stock for $22 cash per share.
12/1/12 - Declared and paid a total dividend of $95,000.

Required:
1. Prepare the journal entry for each transaction listed above.
2. In your own words, explain the main differences between common and preferred stock.

Linda's Lampshades started business on Jan. 1, 2001. They had the following inventory transactions:

Journals - Jan. 2001

Purchases

Supplier         Date Received         Quantity        Unit Cost       Amount

Donna           01/10/01                110              12.00            1320.00

Thomas         01/15/01                160              14.00            2240.00

Cindy            01/18/01                150              15.00            2250.00

Sales

Customer      Date shipped    Quantity      Sel. Price                Amount         

Norilene        01/16/01         200                  25.00                   5000.00

1.    Calculate the ending inventory, using the perpetual inventory method:

A.     Using FIFO

B.     Using LIFO

C.     Using Average Cost

2.    Prepare the following statement            
Using

                                      FIFO    LIFO        Average Cost

Sales

Cost of Sales          

Gross Profit