Problem: Q 1
On July 1, 2014 Linked Up Inc. acquired a new machine at a cost of $15,000 with a residual value of $3,000. The estimated useful life is 5 years and 100,000 units. For the year ending June 30, 2015 the machine produced 15,000 units. For the year ending June 30, 2016, the machine produced 10,000 units.
1. Using the following depreciation methods (straight line, units of production) calculate the depreciation for the year ending 6/30/15 and present each of the journal entries (for each method) in proper form.
2. Describe a Classified Income Statement. Include a description of the calculations on the statement. Why are the calculations important?
3. Choose one ofthe inventory valuation methods (FIFO, LIFO or weighted average). Describe how the method is used to value inventory and its effect on cost of goods sold and ending inventory.
4. The Bank Balance presented on the bank statement totals $10,000 while the general ledger cash balance for this account, on the same date, the last day of the month, displays a value of $12,255.
Please explain the issues related to this difference and how they would be resolved. Use your experience in creating a bank reconciliation to assist you in considering the variables.
5. Describe how and why a company issues stock. Try to include at least 3 of the terms discussed in the text. Provide example journal Entries for a company issuing stock for the first time.
6. Accounts Receivable and Uncollectible Accounts
Enterprising Students Incorporated, a newly incorporated company, is trying to determine how they should be recording uncollectible accounts. Write a short memo discussing how they should record their uncollectible accounts. Describe both the direct write off and allowance methods, discussing the advantages and disadvantages.