Problem 1: Press Corporation purchased a truck for $40,000. The company expected the truck to last four years or 100,000 miles, with an estimated residual value of $4,000 at the end of that time. During the first year, the truck was drive 27,500 miles.
Compute the depreciation for the first year under each of the following methods: (a) straight-line, (b) units of production, (c) double-declining-balance.
(Show your work)
Problem 2: Up to the date of a fire that completely destroyed all of Singer's inventory, Singer had sales of $2,000,000 and purchases of $1,800,000. The cost of beginning inventory was $140,000 and the company's typical gross profit was 40 percent.
Using the gross profit method, estimate Singer's inventory loss from the fire. (Show your work)