Saint MBA560 week 3 homework

Problem 5- 33 Effect of different inventory cost flow methods on financial statements The accounting records of Clear Photography, Inc., reflected the following balances as of January 1, 2012:

Cash $ 18,000

Beginning inventory 13,500 ( 150 units @ $ 90)

Common stock 15,000

Retained earnings 16,500

The following five transactions occurred in 2012: 1. First purchase ( cash) 120 units @ $ 92 2. Second purchase ( cash) 200 units @ $ 100 3. Sales ( all cash) 300 units @ $ 185 4. Paid $ 15,000 cash for operating expenses. 5. Paid cash for income tax at the rate of 40 percent of income before taxes. Required a. Compute the cost of goods sold and ending inventory, assuming ( 1) FIFO cost flow, ( 2) LIFO cost flow, and ( 3) weighted- average cost flow. b. Use a vertical model to prepare the 2012 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average. ( Hint: Record the events under an accounting equation before preparing the statements.)

Problem 6- 25 Calculating depreciation expense using four different methods O’Brian Service Company purchased a copier on January 1, 2012, for $ 17,000 and paid an additional $ 200 for delivery charges. The copier was estimated to have a life of four years or 800,000 copies. Salvage was estimated at $ 1,200. The copier produced 230,000 copies in 2012 and 250,000 copies in 2013. Required Compute the amount of depreciation expense for the copier for calendar years 2012 and 2012, using these methods:

a. Straight- line.

b. Units- of- production.

c. Double- declining- balance.