Ontario, Inc.’s inventory records for a particular development program show the following at January 31

Ontario, Inc.’s inventory records for a particular development program show the following at January 31:
Jan 1 Beginning inventory 4 units @ $155 = $ 620
Jan15 Purchase 7 units @ 155 = $1,085
Jan26 Purchase 12 units @ 165 = $1,980
1. Compute cost of goods sold and ending inventory, using each of the following methods:
a. Specific unit cost, with three $155 units and five $165 units still on hand at the end b. Average cost c. First-in, first-out d. Last-in, first-out
2. Which method produces the highest cost of goods sold? Which method produces the lowest cost of goods sold? What causes the difference in cost of goods sold?
Exercise 2
Determine depreciation amounts by three methods) Ralph’s Pizza bought a used Toyota delivery van on January 2, 2012, for $18,600. The van was expected to remain in service for four years (35,000 miles). At the end of its useful life, Ralph’s officials 440441estimated that the van’s residual value would be $2,500. The van traveled 13,500 miles the first year, 12,000 miles the second year, 3,500 miles the third year, and 6,000 miles in the fourth year. Prepare a schedule of depreciation expense per year for the van under the three depreciation methods Straight-line, Units-of-production and Double-declining-balance . (For units-of-production and double-declining-balance, round to the nearest two decimals after each step of the calculation.)
Which method best tracks the wear and tear on the van? Which method would Ralph’s prefer to use for income tax purposes? Explain in detail why Ralph’s prefers this method.