Karen Austin Corporation

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Karen Austin Corporation has capitalized software costs of $709,500, and sales of this product the first year totaled $395,130. Karen Austin anticipates earning $921,970 in additional future revenues from this product, which is estimated to have an economic life of 4 years. Compute the amount of software cost amortization for the first year.
(a) Compute the amount of software cost amortization for the first year using the percent of revenue approach.

$

(b) Compute the amount of software cost amortization for the first year using the straight-line approach.

$





(Gross Profit Method)
Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.
Inventory, May 1 $180,800
Purchases (gross) 723,200
Freight-in 33,900
Sales 1,130,000
Sales returns 79,100
Purchase discounts 13,560
(a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.

Inventory $

(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.

Inventory $

    • 10 years ago
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