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ACC 545 Week 2 Individual Assignment
Week 2 Assignment:

With the general data provided the following Financial

Statements for ABC Company:

-Balance Sheet

-Income Statement

-Calculate Cost of Goods Sold Using Average Cost

Method

-Calculate Depreciation Expense using the straight-line

method

-Calculate Deferred tax asset/liability

1.

a.
The following data is available for your computation of the cost of goods sold and the
ending inventory.

A physical inventory on December 31, 2013, shows 810 units on hand.

Calculate Cost of Goods Sold (COGS) using average cost.

Purchases

Units

Cost

Beginning Inventory

800

14.39

January 5, 2014

950

13.46

Purchase

March 25, 2014

950

12.81

Purchase

June 8, 2014

745

13.65

Purchase

September 15, 2014

625

13.25

Purchase

December 15, 2014

505

14.97

Purchase

Note your computation from the above data should yield your ending inventory (which you will insert
in the trial balance in the appropriated category) and the cost of goods sold which you will use in the
income statement develop from the data given. Dont forget to post your Journal Entry for this one
booking your cost of goods and your ending inventory.
1.

b.
The following data will be used for your computation of depreciation expense using the
straight line method.

ABC Company has the following assets acquired on January 1, 2013 requiring depreciation
calculation:

Asset

Cost

Plant with 30 year life at a cost of $660,000

Land at a cost of $2,250,000

660

Life

30

2,250

Machinery and Equipment with 20 year life at a cost

of 79,000.

Truck with a life of 7 years at a cost of $42,000

79

20

42

From the above data you are given the information required the depreciation expense for the assets
acquired on January 1, 2013. Please compute the above depreciation expense and add this to the
depreciation expense given in the data above at 1595. Your depreciation expense computed plus
the 1595 will be inserted into the Income Statement you develop.
1.

c.
The following data is available showing error corrections and change in inventory
method needed for the 12/31/2013 statements to be booked against retained earnings since
these errors were just discovered and occurred in prior years. The change in accounting
method should be booked against Retained Earnings per GAAP.

(C ) Error Corrections and

change in accounting method-

(1) An error was discovered during 2013 relating to the understatement of

depreciation expense in 2011

resulting in a Prior Period Adjustment of

$1,505 before taxes.
Guidance: See our Intermediate Text
Chapter 22, Illustration 20.

(2) ABC Company changed its method of valuing inventory during 2013.
The cumulative increase in income

from the change in inventory methods was

$1,285 before taxes.
Guidance: someone in our class should
attempt EX 22-2 from our Intermediate text
Chapter 22. Post this in the week 2 forum.

Requirement: Please provide the Journal Entry for the above 2 items and insert your results in the
appropriate accounts in the balance sheet provided above and in the excel sheet.
Overall assignment guidance: this assignment in the attached excel sheet. Please create a tab in
the excel sheet and name it week 2. Please insert the required assignment from the above data in
the week 2 tab and submit your completed assignment.