Alpha Company has the following items in its equipment account: Method of Asset

Question

Alpha Company has the following items in its equipment account: Method of Asset & Date Purchased Cost Salvage Value Depreciation 1. Delivery Truck (4/30/15) 2. Office Furniture (6/1/15) 3. Computer (4/1/15) Unit of Activity $60,000 $11,000 Straight Line $15,000 $500 Double Decining 5,000 $700 The delivery truck is estimated to have a life cycle of 200,000 miles. It was driven for 1. 16,500 miles in 2015& 24,600 miles in 2016 2. The Office Furniture has a life expectancy of 7 years 3. The Computer has a ufe expectancy of 4 years Round any per unit calculations to the nearest half penny. Round all annual depreciation expenses to the nearest dollar. Use this information to compute for Fiscal Year 2016 the following values: 1. Book Value of the Delivery Truck 2. Depreciation Expense- Truck 3. Book Value of the Office Furniture 4. Depreciation Expense-Office Furniture 5. Book Value of the Computer 6. Depreciation Expense- Computer

Explanation / Answer

Solution:-

LIFO method:-

1. Ending inventory:-

$ 3,650

2. Goods available for sale:-

$ 9,000 + $ 1,500 = $ 10,500

3. Sales:-

(225 * 20) + (300 * 25) = $ 12,000

4. Cost of goods sold:-

$ 5,650

5. Gross profit:-

12,000 - 5,650 = $ 6,350.

Explanation:-

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Date Purchase Sales Balance Units Unit cost Total Units Unit cost Total Units Unit cost Total 5/1 150 10 1,500 5/5 200 12 2,400 150 10 1,500 200 12 2,400 5/10 200 12 1,200 125 10 1,250 25 10 250 5/15 300 14 4,200 125 10 1,250 300 14 4,200 5/20 300 14 4,200 125 10 1,250 5/25 150 16 2,400 125 10 1,250 150 16 2,400 Total 650 9,000 525 5,650 275 3,650

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