1. On December 15, 2015, Frack purchased goods costing $100,000. The terms were FOB shipping point. Costs incurred by Frack in connection with the purchase and delivery of the goods were as follows:
Normal freight charges $3,000
Handling costs 2,200
Insurance on shipment 200
Abnormal freight charges for express shipping 1,500
The goods were received on December 17, 2015. What is the amount that Frack should charge to:
a. inventory
b. current period expense
2. During 2015, Floozy Co. purchased $960,000 of inventory. The cost of goods sold for 2015 was $900,000, and the ending inventory at December 31,2014, was $240,000. What was the inventory turnover for 2015? Round answer to one decimal place.
3. CVR Company purchased equipment for its roller bearing process on January 1, 2014. The cost of this machine was $150,000. The company estimated that the equipment would have a salvage value of $15,000 at the end of its service life. Its service life is estimated at 6 years.
Required: Compute the depreciation expense under the following methods for the year 2014:
Straight-line method
Sum-of-the-years-digits
Double declining balance
4. Pinnacle purchased a machine on 1/1/14 for $200,000, estimated salvage value $20,000 and estimated service life of 6 years.
Required: If the depreciation expense for 2015 was $42,857; what depreciation method does Pinnacle use? Round all answers to the nearest whole dollar.