| MBA 5850 Case Study #2 |
| #1. | Prepare a depreciation schedule for the assets in the following transactions using the straight line method of depreciation: |
| | A. | Flash Enterprises purchased 3 new delivery trucks at a cost of $45,000 each. Each truck has an estimated useful life of 5 years. |
| | B. | Flash needed a new forklift to be used in warehouse operations at a cost of $12,500. The old forklift was traded in for $1,500. |
| | | The new forklift has an estimated useful life of 4 years. |
| #2. | Analyze the results of the below: |
| | A. | Flash has an opportunity to sell one of the trucks from (1A) above after 3 years for a price of $15,000. |
| | | Should they accept the offer? Why or why not? |
| | B. | The used forklift from (1B) above had an original cost of $10,000 and a book value of $500 at the time of trade in. |
| | | Calculate any gain or loss and show the appropriate journal entry. |
| #3. | Inventory Evaluation: |
| | | | | | units | unit cost | total cost |
| | Beginning inventory | | | | 160,000 | $2.00 | $320,000 |
| | Purchase #1 | | | | 60,000 | $2.50 | $150,000 |
| | Purchase #2 | | | | 60,000 | $3.50 | $210,000 |
| | Ending Inventory | | | | 30,000 |
| | A. | Calculate the value/cost of ending inventory & cogs using the following methods: |
| | | LIFO |
| | | FIFO |
| | | AVG COST |
| | B. Assuming the company has NOT determined which inventory method to use, Which method should they |
| | | use for income tax purposes? Why? |
| | C. The sold units had an average price of $6.00. Calculate gross profit and gross profit % using the method you chose in (B). |
jampanarajesh
MBA5850Case2.xlsx
