## Which depreciation method more closely reflects the used-up service potential of the car? Explain.

Luric Company purchased a new car on July 1, 2002, for \$15,000. The estimated life of the car was four years or 104,000 miles, and its salvage value was estimated to be \$2,000. The car was driven 9,000 miles in 2002 and 27,000 miles in 2003.

1. Compute the amount of depreciation expense for 2002 and 2003 using the following methods:

a. Straight-line.

b. Units-of-production.

2. Which depreciation method more closely reflects the used-up service potential of the car? Explain.

## Calculate the stock dividend rate equivalent to each of the following stock splits:

Calculate the stock dividend rate equivalent to each of the following stock splits:

a. 1.5:1

b. 2:1

c. 3:1

d. 7:5

## Compute the revised annual depreciation.

On January 1, 2011, the Ramirez Company ledger shows Equipment \$29,000 and Accumulated Depreciation \$9,000. The depreciation resulted from using the straight-line method with a useful life of 10 years and salvage value of \$2,000. On this date, the company concludes that the equipment has a remaining useful life of only 4 years with the same salvage value. Compute the revised annual depreciation.

## The Reuschel Company began 2016 with inventory of 24,000 units at a cost of \$7 per unit. During 2… 1 answer below »

The Reuschel Company began 2016 with inventory of 24,000 units at a cost of \$7 per unit. During 2016, 64,000 units were purchased for \$8.50 each. Sales for the year totaled 75,000 units leaving 13,000 units on hand at the end of 2016. Reuschel uses a periodic inventory system and the LIFO inventory cost method. Calculate cost of goods sold for 2016. Calculate the effect of the LIFO on the income.