ACC 102 Module Exam I, Chapter 10 and 13

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    1. A company purchased a truck on October 1 of the current year at a cost of $40,000. The truck is expected to last six years and has a salvage value of $2,200.

    The company’s annual accounting period ends on December 31.

    a. What is the depreciation expense for the current year, assuming the straight-line method is used?

    b. What is the depreciation expense for the current year, assuming the double-decliningbalance method is used?

    2. A machine was purchased for $37,000 and depreciated for five years on a straight-line basis under the assumption it would have a ten-year life and a $1,000 salvage value.

    At the beginning of the machine’s sixth year it was recognized the machine had three years of remaining life instead of five and that at the end of the remaining three years

    its salvage value would be $1,600. What amount of depreciation should be recorded in each of the machine’s remaining three years?

    3. On April 1, Year 1, SAS Corp. purchased and placed in service a plant asset. The following information is available regarding the plant asset:

    Acquiition cost130,000

    Estimates Salvage value15,000

    Estimates Useful life5years

    Make the necessary adjusting journal entries at December 31, Year 1, and December 31, Year 2 to record depreciation for each year under the following depreciation methods:

    a. Straight-line. b. Double-declining-balance.

    a) Straight line method

    4. A corporation received its charter and began business this year. The company is authorized to issue 50,000 shares of $100 par, 10%, noncumulative,

    nonparticipating preferred stock, and 500,000 shares of no-par common stock. The following selected transactions occurred during this year:

    Apr-05issued 250 shares of preferred stock for $104 cash oer share.

    Jun-15Exchanged 750 shares of common stock for $15,000 in legal services

    incurred in the organisation of the company

    Prepare journal entries to record these transactions.

    5. Marble Corporation had the following balances in its stockholders’ equity accounts at December 31, 2010:

     

    Comon Stock, $10 par, 50,000 shares authorsied,

    20,000 shares issued200,000

    Paid In Capital in Excess of Par vale, Common250,000

    Retained Earnings500,000

    Traesury Stock, 1,000 shares-20,000

    Total Stockholder Equity930,000

    The following transactions occurred during 2011:

    Feb-03Sold and issued 3,000 shares of common stock for $22 per share

    May-10Declared a $0.50 per share dividend on common stock

    Oct-12Sold 500 shares of traesury stock for $20 per share

    Dec-31Net Income for the Year was determined to be $75,000

    Based on the above information, prepare a statement of stockholders’ equity for 2011. Use the form below.

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