(Answered) Question 1 presented below is a list of items which may or

Accounting

Question 1. Presented below is a list of items which may or may not be reported as inventory in a company's December 31 balance sheet.

a) Materials on hand not yet placed into production by a manufacturing firm.

b) Goods purchased f.o.b. shipping point that are in transit at December 31.

c) Raw materials on which a manufacturing firm has started production , but which are not completely processed.

d) Costs identified with units completed by a manufacturing firm, but not yet sold.

e) Costs incurred to advertise goods held for resale.

Required: Indicate which of these items would typically be reported as inventory in the financial statements. If an item should not be reported as inventory , indicate how it should be reported in the financial statements.

Question 2. The following information about a company for the year 2014 has been availed to you.

January 1 Purchase of a lawn mower and accessories sh. 240,000

Useful life 5 years

Salvage value sh. 40,000

Estimated annual fuel cost sh. 10,000

Monthly salary of operator sh. 8,000

Required: Compute the depreciation charge for 2014,. Use the straight line method.

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