REQUIRED: a. Compute cost of goods sold and gross profit using an inventory schedule b. Compute the cost of the building and the annual depreciation expense using the straight-line method. c. Prepare...

Extracted text: REQUIRED: a. Compute cost of goods sold and gross profit using an inventory schedule b. Compute the cost of the building and the annual depreciation expense using the straight-line method. c. Prepare a depreciation schedule for the equipment, clearly showing the annual depreciation expense, accumulated depreciation and net book value for each of its useful life. d. Prepare the journal entries to record the 2021 depreciation. e. Prepare the adjusting entry for bad debt expense under the following independent assumptions: i. The company estimates that 1% of sales (determined from the inventory schedule above) will be uncollectible An aging schedule indicates that $14,800 of accounts receivable will be ii. uncollectible. f. Explain to Chad the economic unit assumption and two (2) differences between the business type he was operating before July 2021 and Goldy Inc.


Extracted text: Problem 3 Inventories, Depreciation & Accounting for Receivables Chad Goldman was operating a gold business on his own prior to starting the Company, Goldy Inc. in July 2021. He has to organize his financial records and asked for your assistance in specific areas. The following information about the company for the month of July 2021, is as follows: July 1 July 1 Beginning inventory 100 gold at a cost of $340 per gold unit. Purchased equipment for $280,000. July 3 Purchased 200 gold at a cost of $350 each. July 5 Sold 180 gold for $730 each. July 10 75 gold units from the sale on July 5 were returned to inventory. July 11 Purchased 350 gold at a cost of $380 each. July 25 Sold 400 gold for $750 each. Purchased a building with a cash price of $450,000, Člosing Cost amounted to $25,000 and remodeling charges of $45,000. July 31 NOTES: v The company implemented the FIFO cost flow assumption and a perpetual inventory system. V The building purchased on July 31 has an estimated useful life of 8 years and residual value of $40,000. The building uses the straight-line method of depreciation. V The equipment purchased on July 1 has an estimated useful life of the 5 years and a residual value of $30,000. The equipment uses the double-declining method of depreciation. V The company financial year-end is December 31st and a credit balance of $3,800 in Allowance for Doubtful Accounts.