The following information is available for Flip Company:
600 units at $5
900 units at $6
500 units at $7.25
Assume that Flip uses a periodic inventory system and that there are 700 units left at the end of the month. (Round all final answers to the nearest dollar.)
a. Compute the cost of goods available for sale.
b. Compute the value of ending inventory and Cost of Good Sold under the
(1) LIFO method.
(2) FIFO method.
(3) Average-cost method
Question 3: 15% points:
The following items were taken from the post adjusted trial balance of Flap Company.
(All balances are normal.)
Notes payable in 2015
Notes payable after 2016
Instructions: Prepare a classified balance sheet in good form as of December 31, 2014.
Question 4: 10% points:
Prepare journal entries to record the following transactions entered into by Flip
Accepted a $10,000, 12%, 1-year note from Flop as full payment on her
Sold merchandise on account to Flap, Inc. for $12,000, terms 2/10, n/30.
Flap, Inc. returned merchandise worth $500.
Received payment in full from Flap, Inc.
Accrued interest on Flop’s note.
Flop honored her promissory note by sending the face amount plus interest.
No interest has been accrued in 2013
Question 5: 10% points:
Flip Company purchased equipment on July 1, 2011 for $90,000. It is estimated that the
equipment will have a $5,000 salvage value at the end of its 5-year useful life. It is also
estimated that the equipment will produce 100,000 units over its 5-year life.
Answer the following independent questions.
1. Compute the amount of depreciation expense for the year ended December 31, 2011,
using the straight-line method of depreciation.
2. If 14,000 units of product are produced in 2011 and 26,000 units are produced in
2012, what is the book value of the equipment at December 31, 2012? The company
uses the units-of-activity depreciation method.
3. If the company uses the double-declining-balance method of depreciation, what is the
balance of the Accumulated Depreciationâ€”Equipment account at December 31,
Question 6: 10% points:
Flip earns a salary of $7,500 per month during the year. FICA taxes are 8% on the first
$100,000 of gross earnings. Federal unemployment insurance taxes are 6.2% of the first
$7,000; however, a credit is allowed equal to the state unemployment insurance taxes of
5.4% on the $7,000. During the year, $25,600 was withheld for federal income taxes and
$5,700 was withheld for state income taxes.
(a) Prepare a journal entry summarizing the payment of Flipâ€™s total salary during the
(b) Prepare a journal entry summarizing the employer payroll tax expense on Flipâ€™s
salary for the year.
(c) Determine the cost of employing Flip for the year.
Multiple choice questions allocated 1% point each. Make your selection by
recording the letter in the answer box provided.