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Three identical units of Item Steele Plate are purchased during March, as shown below.

	Item Steele Plate	Units	Cost
Mar. 3	Purchase	1	$830
Mar. 10	Purchase	1	840
Mar. 19	Purchase	1	880
Total		3	$2,550

Assume that one unit is sold on March 23 for $1,125. Determine the gross profit for March and ending inventory on March 31 using (a) FIFO, (b) LIFO, and (c) average cost methods.

2. Beginning inventory, purchases and sales data for tennis rackets are as follows:

	Apr 3	Inventory		12 units	@	$45
	11	Purchase		13 units	@	$47
	14	Sale		18 units
	21	Purchase		9 units	@	$60
	25	Sale		10 units

Complete the inventory cost card assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using FIFO.

	Purchases			Cost of Merchandise Sold			Inventory
Date	Qty	Unit Cost	Total Cost	Qty	Unit Cost	Total Cost	Qty	Unit Cost	Total Cost
Balances

3. Beginning inventory, purchases and sales data for widgets are as follows:

	Apr 3	Inventory		15 units	@	$30
	11	Purchase		12 units	@	$27
	14	Sale		18 units
	21	Purchase		7 units	@	$25
	25	Sale		10 units

Complete the inventory cost card assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using LIFO.

	Purchases			Cost of Merchandise Sold			Inventory
Date	Qty	Unit Cost	Total Cost	Qty	Unit Cost	Total Cost	Qty	Unit Cost	Total Cost
Balances

4. Using the lower of cost or market, what should the total inventory value be for the following items:

Item	Quantity	Unit cost price	Unit market price	Total cost price		Total market price
A	300	$15.00	$14.50	$4,500		$4,350
B	200	$14.00	$15.00	$2,800		$3,000
C	100	$17.00	$17.50	$1,700		$1,750

Apply the lower-of-cost-or-market method to inventory as a whole.

5. Solare Company acquired mineral rights for $60,000,000. The diamond deposit is estimated at 6,000,000 tons. During the current year, 2,300,000 tons were mined and sold.

a.	Determine the depletion rate.
b.	Determine the amount of depletion expense for the current year.
c.	Journalize the adjusting entry to recognize the depletion expense.

6. Equipment acquired on January 2, 2011 at a cost of $273,500 has an estimated useful life of eight years and an estimated residual value of $35,500.

Required:

(1)	What was the annual amount of depreciation for the years 2011, 2012, and 2013, assuming the straight-line method of depreciation is used?
(2)	What was the book value of the equipment on January 1, 2014?
(3)	Assuming that the equipment was sold on January 2, 2014, for $170,500, journalize the entry to record the sale.
(4)	Assuming that the equipment had been sold on January 2, 2014, for $189,000 instead of $168,500, journalize the entry to record the sale.

7. Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of 5 years, or 14,000 operating hours, and a residual value of $10,000. Compute the depreciation for the first and second years of use by each of the following methods:

(a)	straight-line
(b)	units-of-production (1,200 hours first year; 2,250 hours second year)
(c)	declining-balance at twice the straight-line rate

(Round the answer to the nearest dollar.)

8. Dixon Sales has seven sales employees which receive weekly paychecks. Each earns $10.25 per hour and each has worked 40 hours in the pay period. Each employee pays 12% of gross in Federal Income Tax, 3% in State Income Tax, 6% of gross in Social Security Tax, 1.5% of gross in Medicare Tax, and 1/2% in State Disability Insurance. Journalize the recognition of the pay period ending January 19th which will be paid to the employees January 26th. (Keep in mind that none of the employees is subject to a ceiling amount for social security.)

9. An employee earns $40 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. Assume that the employee worked 60 hours during the week, and that the gross pay prior to the current week totaled $58,000. Assume further that the social security tax rate was 7.0% (on earnings up to $100,000), the Medicare tax rate was 1.5%, and the federal income tax to be withheld was $614.

Required:

(1) Determine the gross pay for the week.

(2) Determine the net pay for the week.

10. Ecco Company sold $150,000 of kitchen appliances during September under a 6 month warranty. The cost to repair defects under the warranty is estimated at 6% of the sales price. On October 15 a customer required a $200 part replacement, plus $85 labor under the warranty.

Provide the journal entry for (a.) the estimated expense on September 30 and (b.) the October 15 warranty work.

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