ACC112 Study Guide - Mid-Term Solutions.docx - ACC112 Exam#1 Study Guide Solutions Chapters 10 12 Practice Problems 1 A company purchased a cash

ACC112 Study Guide - Mid-Term Solutions.docx - ACC112...

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ACC112 Exam #1 Study Guide Solutions Chapters 10 & 12 Practice Problems 1. A company purchased a cash register on January 1 for $8,500. This register has a useful life of 5 years and a salvage value of $500. What would be the depreciation expense for the third year of its useful life using the straight-line method? (Cost-salvage value)/life (8,500-500)/5= 1,600 It is the same every year 2. A company sold a machine that originally cost $200,000 for $160,000 cash. The accumulated depreciation on the machine was $20,000. Should the company recognize a gain or loss and how much Cash – BV = Gain/(loss) 160,000 – (200,000-20,000)= (20,000) 3. Smith, West, and Krug form a partnership. Smith contributes $380,000, West contributes $250,000, and Krug contributes $170,000. Their partnership agreement calls for a 10% interest allowance on the partner’s capital balances with the remaining income or loss to be allocated equally. If the partnership reports income of $274,000 for its first year, what amount of income is credited to Krug’s capital account? Smith 380,000 x .1=38,000 West 250,000 x .1=25,000 Krug 170,000 x .1=17,000 Total 80,000 274,000-80,000=194,000/3=64,667 64,667+17,000= 81,667 4. A company purchased and installed a machine on January 1, 2009 at a total cost of $122,000. Straight-line depreciation was calculated based on the assumption of a five-year life and $15,000 salvage value. The machine was disposed of on December 31, 2011 of the third year. The company uses the calendar year. (25 points) For full credit, show all of your work. Use the general journal paper attached.
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  • Fall '17
  • Corporate Finance, Generally Accepted Accounting Principles, Shares authorized, dr. cash

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