Mgmt_200_Fall_2006_Exam_3_Solution(3,25)

Mgmt_200_Fall_2006_Exam_3_Solution(3,25) - Name: _ PUID: _...

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Name: ________________________ PUID: ________________________ Purdue University Krannert School of Management MGMT 200 – Introductory Financial Accounting Fall 2006 Exam 3 – November 13, 2006 - SOLUTION This exam consists of 4 questions on 8 pages (excluding this cover page and the present value tables’ page = 10 pages total) for a total of 100 points. Time allowed: 90 minutes. Answer all questions. To ensure full credit and to maximize partial credit, clearly show all supporting calculations. The exam is closed book. A calculator is permitted. Present value tables are provided on the last page. GOOD LUCK . Question 1 (25 points) ________ Question 2 (25 points) ________ Question 3 (25 points) ________ Question 4 (25 points) ________ TOTAL (100 points) ________
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Question 1. Property, Plant, and Equipment (25 points) Tribal Corporation purchased a machine used to stamp out metal parts on January 1, 2004. The machine cost $1,244,160. At the time of purchase the machine was estimated to have a useful life of 12 years and an estimated resale value at the end of year 12 of $92,160. Required: a. Prepare the journal entry to record depreciation expense for 2004 assuming Tribal Corporation elects to depreciate the machine using the straight-line method. = [1,244,160 – 92,160] / 12 = $96,000 per year Depreciation expense 96,000 Accumulated depreciation 96,000 b. Prepare the journal entry to record depreciation expense for 2005 assuming Tribal Corporation elects to depreciate the machine using the straight-line method. Depreciation expense 96,000 Accumulated depreciation 96,000 c. Due to a down-turn in the economy, Tribal Corporation undertook a restructuring in 2006 and sold the machine on May 1, 2006 for $880,000. Prepare the journal entries to record depreciation expense for 2006 and the sale of the machine on May 1, 2006 assuming Tribal Corporation records depreciation using the straight-line method. 4 months = 96,000 x 4/12 = 32,000
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Mgmt_200_Fall_2006_Exam_3_Solution(3,25) - Name: _ PUID: _...

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