Question 1: On April 1, 2014, Corgan sold Smashing inventory for $100,000. The cost of the inventory was 62,500. On May,14, 2014 Smashing sold 40% of this inventory to a third party for $82,000.
Both companies used the perpetual Inventory Method and bought and sold on account.
A. Provide all necessary journal entries for Smashing for these transactions.
B. Calculate Smashing's Gross Profit and Gross Profit percentage for these transactions.
Question 2: AA sold a building to BB on 1/1/14 for $500,000. AA had purchased the building on 1/1/10 for $600,000 and estimated it would have a 10 year useful life and no salvage value. Both companies use the straight-line method of depreciation.
What was AA's depreciation per year? ____________
What will be BB's depreciation per year?