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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.

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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