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Final

ACC100 Final: Acc100ReviewFINAL


Department
Accounting
Course Code
ACC 100
Professor
Alison Beavis
Study Guide
Final

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
Castalucci Ltd. purchased equipment on January 1, 2010 for $36,500. It is expected to last for 5
years and have a residual value of $1,500. Castalucci uses the double-declining-balance
method for depreciation.
1. Calculate the depreciation expense, accumulated depreciation and the book value for
the first two years of the equipment’s life 
2. What factors may have influenced Castalucci to use the double-declining balance
method?
3. Assume that the company sells the equipment for $10,000 on April 1st, 2012. Record the
entries required for 2012.
1. Year
Depreciation expense
Accumulated
Depreciation
Net book value
2. To have a consistent combination of depreciation expenses and repair and maintenance
expense during the life of the asset. In other words, in the early years of the asset’s life,
when repair and maintenance expenses are low, depreciation expenses will be high. In
the later years of the asset’s life, repair and maintenance expenses will be high, and
depreciation expenses will be low. *Rarely in cases do companies use double-declining
method*
3. Date
Assets
=
Liabilities
+
Shareholders' Equity

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
Fitness Ltd. is a new health club operating in a suburb of Toronto. The company has selected a
December 31 year end. For each item listed below prepare the transaction entry and the
adjusting entry required.


 !"#$%&'(!

)*+(,-.

.,
1. On September 1st, 2012 ABC Company purchased a two year insurance policy for
$22,800.
2. On November 1st, 2012 a customer paid $600 for a one year gym membership.
3. The company pays their employees on a weekly basis. The gym is open 7 days a week.
On Friday December 28th the company paid the employees $3,500 for the week.
4. On December 31st a customer owed the gym $120 for tanning sessions received during
the month of December. The customer paid for the session on January 10th, 2013.

"
#$
%/'(
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0123 Ending balances on Dec 31 Prepaid insur $19,000, Unearned rev $500 Wages
Pay $1,500
4
Harvard Inc.’s inventory records for the month of May reveal the following:
Inventory, May 1st 200 units @ $6 each
May 4th purchase 150 units @$6.50 each
May 7th sale 100 units @$24.00 each
May 10th purchase 220 units @$6.70 each
May 14th sale 265 units @$24.00 each
May 20th purchase 100 units @$7.00 each
Calculate the cost of goods sold and ending inventory under each of the following two methods
(assume a periodic inventory system): a) weighted average and b) FIFO
a) Weighted Average
 5 50
60
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