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Questions: Date Transaction Quantity Unit Cost 1/1 Beginning balance 1,000 $12 2

ID: 2601051 • Letter: Q

Question

Questions:

DateTransactionQuantityUnit Cost

1/1Beginning balance1,000$12

2/4Purchase2,000$18

2/20Sale2,500$30

4/2Purchase3,000$23

11/4Sale2,200$33

Instructions:

Compute COGS, assuming, Tritt Corp uses:

(35 Marks)

Machine$1,300,000

Accumulated depr   360,000

Book value   940,000

Depreciation is computed at $72,000 per year on straight linebasis.

Instructions:

Prepare the journal entries with various situation:

(30 Marks)

Bus

Acquired

Cost

Residual Value

Useful life in years

Depreciation method

1

1/1/2012

$96,000

$6,000

5

Straight-line

2

1/1/2012

$140,000

$10,000

4

Declining balance

3

1/1/2013

$92,000

$8,000

5

Units of activity

For the declining balance method, the company uses the double declining rate. For units of activity method, total miles are expected to be 120,000 miles. Actual miles of use in the first 3 years were 2013: 24,000 miles, 2014: 36,000 miles and 2015: 31,000 miles.

Instructions:

Bus

Acquired

Cost

Residual Value

Useful life in years

Depreciation method

1

1/1/2012

$96,000

$6,000

5

Straight-line

2

1/1/2012

$140,000

$10,000

4

Declining balance

3

1/1/2013

$92,000

$8,000

5

Units of activity

Explanation / Answer

Solution 1:

a) FIFO method:

Therefore Cost of Goods sold under FIFO method is having value of $87,100.

b) Weighted Average Method:

Opening stock = 1000*12 = $12,000

Purchases = (2000*18) + (3000*23) = $105,000

Weighted average cost per unit = ($12,000 + $105,000) / (1000+2000+3000) = $19.50 per unit

Unit sold = 2500 + 2200 = 4700 units

COGS = 4700 * 19.50 = $91,650

c) Moving average method:

Therefore Cost of Goods sold under moving average method is having value of $88,400.

Computation of ending inventory COGS under FIFO Date Opening Stock Receiving Issue Closing Stock Qty Rate Amount Qty Rate Amount Qty Rate Amount Qty Rate Amount 1-Jan 1000 12 $12,000.00 0 0 $0.00 0 0 $0.00 1000 12 $12,000.00 4-Feb 1000 12 $12,000.00 2000 18 $36,000.00 0 0 $0.00 1000 12 $12,000.00 2000 18 $36,000.00 20-Feb 1000 12 $12,000.00 0 0 $0.00 1000 12 $12,000.00 500 18 $9,000.00 2000 18 $36,000.00 1500 18 $27,000.00 2-Apr 500 18 $9,000.00 3000 23 $69,000.00 0 0 $0.00 500 18 $9,000.00 3000 23 $69,000.00 11-Apr 500 18 $9,000.00 0 0 $0.00 500 18 $9,000.00 1300 23 $29,900.00 3000 23 $69,000.00 1700 23 $39,100.00 Total $87,100.00