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ACCT 220 Principles of Accounting I Quiz 3

ACCT 220 Principles of Accounting I Quiz 3

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ACCT 220 Principles of Accounting I Quiz 3 ( UMUC )

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ACCT 220 Principles of Accounting I Quiz 3 ( UMUC )

ACCT 220 Principles of Accounting I Quiz 3 ( UMUC )

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ACCT 220 Principles of Accounting I Quiz 3 ( UMUC )

Multiple Choice (7 points each)

1.     On January 1, 20X1, Blake Company purchased a patent for $68,000. The   patent has a remaining legal life of nine years and an expected service life of eight years.  The amortization expense (to the nearest dollar) properly recognized for 20X1 is:$0.

B.   $3,400.

C.   $7,556.

D.   $8,500.

E.   None of these.

2.     Which of the following transactions would cause a change in total stockholders’ equity?

1.     A stock dividend.

2.     Paying a previously declared cash dividend.

3.     Reissuing treasury stock at its cost.

4.     A stock split.

5.     None of these.

3.     Normally, the payment of a previously declared dividend will result in:

1.     a decrease in liabilities.

2.     a decrease in working capital.

3.     a decrease in stockholders’ equity.

4.     All of the above.

5.     None of these.

Problem #1 (15 points)

Hogan Company sold equipment for $6,000 which cost $8,000 and had accumulated depreciation of $5,500.  What is the proper journal entry to record this transaction?

Problem #2 (15 points)

Hector Company sold equipment, for $1,000 which cost $8,000 and had accumulated depreciation of $5,500.  What is the proper journal entry to reflect this transaction?

Problem #3 (15 points)

Gaines originally issued 15,000 shares of $10 par value common stock at $15 per share.  During the current year, 1,000 of these shares were reacquired for $20 each.  What is the proper journal entry to record the reacquisition?

Problem #4 (34 points)

On January 1, 2015 Jett Inc. purchased equipment for $154,000 in cash.  The equipment is expected to have an operating life of 4 years. The estimated salvage value is $25,000.

Required:

1.     Using the straight-line method of depreciation:

2016.                              Determine the annual depreciation expense for 2015 and 2016.

2017.                              Determine the accumulated depreciation at the end of each of the following years: 2015 and 2016.

2018.                              Show how the asset and related accumulated depreciation would appear on the balance sheet at December 31, 2016.

2019.                              Prepare the journal entries to record the asset’s acquisition and annual depreciation expense for 2015 and 2016.

2.     Using the double-declining balance method of depreciation:

2016.                              Determine the annual depreciation expense for 2015 and 2016.

2017.                              Determine the accumulated depreciation at the end of each of the following years: 2015 and 2016.

2018.                              Show how the asset and related accumulated depreciation would appear on the balance sheet at December 31, 2016.

Source: ACCT 220 Principles of Accounting I Quiz 3 ( UMUC )