Cost of Goods Sold(50 points)
Redster Company is a manufacturing firm. Presented below is information concerning one of its products, Ander:
Compute the cost of goods sold under the following situations:
- Periodic system, FIFO cost flow
- Perpetual system, FIFO cost flow
- Periodic system, LIFO cost flow
- Perpetual system, LIFO cost flow
- Periodic system, weighted-average cost flow
- Perpetual system, moving-average cost flow
Depreciation Expense (50 points)
Valley Corporation purchased a new piece of equipment on June 1, 2011. The cost of this machine was $325,000. The company estimated that the machine would have a salvage value of $25,000 at the end of its service life. Its life is estimated at four years and its working hours are estimated at 50,000 hours. Year end is December 31.
Compute the depreciation expense under the following methods. Each of the following should be considered unrelated.
- Straight-line depreciation for 2011.
- Units of production method for 2011, assuming that machine usage was 13,000 hours.
- Sum-of-the-years’-digits for 2012.
- Double-declining balance for 2012.