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# exam3 bootcamp - Exam 3 Boot Camp These sheets are designed...

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Exam 3 Boot Camp These sheets are designed to test your knowledge of the topics in Chapter 9, 10 & 11. To get the maximum benefit you should attempt to answer the questions without the book or notes . This assumes you have already completed the majority of exercises and are familiar with the material. If you just memorize, you will see multiple answers that seem to all work and plus the problems can use alternative wording like the other exercises and problems. (in other words, without complete comprehension of the materials, it is easy to become confused) 1. Depreciation What are the formulas for 1. Straight Line 2. Units of Production 3. Double Declining Balance What is the difference between Depreciation Expense and Accumulated Depreciation ? What is book value ? Let’s see if you know the concept? a. The company purchased a machine that cost \$21,500, has an estimated residual value of \$1,500, and has an estimated useful life of 20,000 machine hours or 4 years. The company ran the machine 3,000 hours in year 1, 8,000 hours in year 2, and 7,000 hours in year 3. 1. What is the depreciation expense for the second year if the company uses straight line depreciation? 2. What is the accumulated depreciation at the end of the second year if the company uses Units of production? 3. What is the book value at the end of the second year, if the company uses double declining balance? 4. Record the depreciation expense for the second year, assuming the company used double declining balance. What is the effect on the accounting equation when depreciation is recorded Account Debit Credit A L SE 2. Journal entries What is the rule for capitalization? When a long lived asset is purchased, what T accounts are involved in the book value? When a group of assets are purchased for less than fair market value, how do you allocate the values? When a group of assets are purchased for more than fair market value, how do you allocate the values? Acc 2013 Exam 3 Review/Drill Page 1

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Let’s see if you know the journal entries? a. In a recent year, the New Bakery Company of Ohio purchased new baking plant priced at \$500,000. Assume that the company paid \$8,000 for sales taxes on the plant, \$70,000 for transportation costs and \$50,000 for installation and preparation of the assets BEFORE use. The annual maintenance is \$5,000 per year. New Bakery paid \$100,000 in cash and the rest with a note b. A company buys land and building together for \$500,000. Assume that the land has an appraised value of \$200,000 and the building has an appraised value of \$400,000. The company pays \$100,000 cash and finances the rest with a note c. As part of a major renovation at the beginning of the year, Mullins’ Pharmacy, Inc., sold shelving units (store fixtures) that were 10 years old for \$1,400 cash. The shelves originally cost \$6,200 and had been depreciated on a straight-line basis over an estimated useful life of 12 years with an estimated residual value of \$200. Assuming that depreciation has been recorded to the date of sale, prepare the journal entry to record the sale of the shelving units.
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exam3 bootcamp - Exam 3 Boot Camp These sheets are designed...

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