Reference no: EM132810693

Questions -

Q1: Sunlit Company uses the periodic inventory system. The company's beginning inventory and later purchases of inventory during Nov 2020 were as below:

Nov 01: Beginning inventory, 35 units @ $20 per unit.

Nov 17: Inventory purchased, 95 units @ $28 per unit.

Nov 25: Inventory purchased, 55 units @ $32 per unit.

Sunlit company sold 110 units during the month of Nov 2020.

Required:

1. Calculate the cost of goods sold and ending inventory for Nov 2020 using both the Weighted Average cost and First in, first out (FIFO) method.

2. Also record the journal entries for the Nov 17 purchase of inventory and when 75 units from this lot were sold for $48 each. Assume both purchase of inventory and its sale are on account.

Q2: Bridge Corporation purchased a new machine on Jan 4, 2019 for $195,000 cash. The machine has a useful life of 10 years or of 35,000 hours. After the useful life the machine will have a residual value of $1,000. The machine was used for 3,500 hours in 2019 and 5,500 hours in 2020.

Required:

1. Calculate the depreciation expense for 2019 and 2020 under each of the following methods:

i. Straight-line

ii. Double diminishing-balance

iii. Units-of -production

2. Calculate the carrying amount at the end of 2020 for the machine when the company is using the Straight-line depreciation method.

3. Record the journal entry for the cash purchase of the machine on Jan 4, 2019 and for its depreciation expense for the year ended December 31, 2019 under the double diminishing method.

Q3: a. Sunlit Company purchased inventory costing $75,000 by paying 10% as cash deposit and signed a 10-month, 8% note payable on Sept 1 2020. The note will be repaid with interest at maturity. Prepare journal entries to record the purchase of the inventory, accrual of interest on Dec 31, 2020 and the final repayment of the note and interest at maturity.

b. $50,000 bonds of Sunlit Company are quoted at 95.60. Are they selling at a discount or at premium? How much will they sell for?

Q4: Bridge Corporation has authorized share capital of an unlimited number of common shares and 600,000 $4, preferred shares. On January 1, 2020, the balance in its shareholders equity includes:

12,000 common shares valued at $58,000,

3,500 preferred shares valued at $36,000 and

Retained earnings of $125,000.

Profit for the year ending December 31, 2020 was $31,000. No dividends were declared during 2020.

During 2020, Bridge Corporation had the following share transactions:

Mar 1 Issued 8,000 common shares for $6 each.

Jun 30 Issued 1050 preferred shares for $11 each.

Sep 1 Issued 65,000 common shares in exchange for land valued at $325,000.

Required:

a) Journalize the share transactions.

b) Prepare the equity section of Bridge Corporation balance sheet at December 31, 2020.

Q5: Bridge Corporation had the following transactions during the current financial reporting period.

Net Loss ($76,000)

Depreciation $16,000

Decrease in accounts receivable $24,500

Increase in inventories $12,800

Increase in accounts payable $32,000

Decrease in income taxes payable $31,500

Decrease in wages payable $16,500

Proceeds on Sale of Equipment $65,000

Repayment of bonds $49,000

Issuance of Common shares $21,000

Proceeds on sale of land $57,000

Loss on sale of land $16,000

Payment of dividends $20,000

Required: Determine the cashflow for Operating, Financing and Investing activities for the company and calculate the net change in cash.