ACC 205 Week 3 Exercise 4 Inventory valuation methods Computations and concepts

4. Inventory valuation methods: computations and concepts.

Wild Riders Surfboard Company began business on January 1 of the current year. Purchases of

surfboards were as follows: Date Quantity Unit Cost Total Cost

1/3 100 $125 $12,500

4/3 200 $135 $27,000

6/3 100 $145 $14,500

7/3 100 $155 $15,500

Total 500 $69,500

Wild Riders sold 400 boards at $250 per board on the dates listed below. The company uses a perpetual inventory system.

Date Quantity Sold Unit Price Total Sales

3/17 50 $250 $12,500

5/17 75 $250 $18,750

8/10 275 $250 $68,750

Total 400 $100,000

Instructions

a. Calculate cost of goods sold, ending inventory, and gross profit under each of the following inventory valuation methods:

First-in, first-out

Last-in, first-out

Weighted average

a. The machine’s book value on December 31, 20X5, assuming use of the straight-line

depreciation method

b. Depreciation expense for 20X4, assuming use of the units-of-output depreciation method.

Actual washing cycles in 20X4 totaled 500.

c. Accumulated depreciation on December 31, 20X5, assuming use of the double-decliningbalance depreciation method.