Question One: 30 marks
Jefry’s Boss purchased a small delivery truck on January 1, 2020.
Cost $55,000
Expected residual value $4,000
Estimated useful life in years 5 years
Estimated useful life in miles 100,000 miles
Instructions: Prepare the deprecation schedule using:
- Straight line method
- Double Declining method
- Straight Line (15 marks)
| Year | Depreciable Cost | Annual Expense | Accumulated Depreciation | Book Value |
| 2020 | ||||
| 2021 | ||||
| 2022 | ||||
| 2023 | ||||
| 2024 |
- Double Declining Method ( 15 marks)
| Year | Depreciable Cost | Annual Expense | Accumulated Depreciation | Book Value |
| 2020 | ||||
| 2021 | ||||
| 2022 | ||||
| 2023 | ||||
| 2024 |
Question Two: (25 Marks: 5 marks each):
On September 1, Reid Supply had an inventory of 15 backpacks at a cost of $20 each. The company uses a perpetual inventory system. During September, the following transactions and events occurred.
Sept. 4 Purchased 80 backpacks at $20 each from Hunter, terms 2/10, n/30.
Sept. 6 Received credit of $120 for the return of 6 backpacks purchased on Sept. 4 that were defective.
Sept. 9 Sold 40 backpacks for $25 each to Oliver Books, terms 2/10, n/30. Sept. 14 Paid Hunter in full, less discount.
Instructions
Post the above transactions to the ledger of Inventory account in Reid Supply books and find the ending balance. The beginning balance is added to the T account already.
Question Three: 20 marks (5 marks each): Presented below is an adjusted trial balance for Cowell Company, at December 31, 2017.
| Cash | €10,700 | Accounts payable | €10,000 |
| Accounts receivable | 20,000 | Notes payable | 9,000 |
| Prepaid insurance | 15,000 | Accumulated depreciation— | |
| Equipment | 35,000 | equipment | 14,000 |
| Depreciation expense | 7,000 | Service revenue | 30,000 |
| Dividends | 1,500 | Retained earnings | 12,000 |
| Advertising expense | 1,400 | Unearned service revenue | 11,000 |
| Rent expense | 800 | Share capital-ordinary | 12,000 |
| Salaries and wages expense | 5,000 | ||
| Insurance expense | 1,600 | ||
| €98,000 | €98,000 |
Instructions: Post the closing entries to the retained earnings account, and determine the ending balance after the closing entries have been posted.
Question Four: 25 marks: Explain the Accounting cycle
