Depreciation and Allowance Methods Financial Accounting Worksheet

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nfnyrv

Business Finance

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Financial Statement Preparation - (40 points) Using the adjusted trial balance below, prepare the following financial statements: 1) Income Statement for the year ending 12/31/16 (15 points) 2) Statement of Owner's Equity for the year ending 12/31/16 (10 points) 3) Balance Sheet as of 12/31/16 (15 points) Cookie Company - Adjusted Trial Balance 12/31/16 Debit Credit Cash $100 Accounts Receivable Equipment Accumulated Deprn - Equipment Accounts Payable Unearned Revenue Dog, Capital Dog, Drawing Service Revenue Wage Expense Supplies Expense Phone Expense 50 200 40 20 60 165 30 150 30 15 10 (30 points) Equipment cost = $ 100, Salvage value at end of useful life = $10 useful life = 3 years Calculate depreciation expense in years 1 & 3 under: a) STRAIGHT LINE deprn expense in year 1: deprn expense in year 3: b) DOUBLE DECLINING BALANCE (DDB) deprn expense in year 1: deprn expense in year 3: 3) UNITS OF ACTIVITY (total units for entire life = 30 units) Year 1, actual units = 8 deprn expense Year 3, actual units = 10 deprn expense = 2) "ALLOWANCE METHOD" FOR UNCOLLECTIBLE ACCOUNTS (30 pc Prepare the adjusting entries : a) Using the % of Sales Method Firm concludes that 1% of sales will be uncollectible. Sales = $100 "Allowance for Doubtful Accounts" has a credit balance = $ 7 b) Using Percentage of Receivables Method Firm concludes that 5% of Accounts Receivable (A/R) will be uncollectible. A/R = $100 "Allowance for Doubtful Accounts" has a credit balance of $ 2
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PART 1

DEPRECIATION

Cost
Salvage value
Useful life
Double declining rate
Dpreciation expense
Straight line

Year 1
Year2
Year 3

$100
10
3 Years
66.67%

Depreciation expense =(Cost - Salvage value)/Useful life in years
Depreciable cost
Depreciation expense
$90
$30
$90
$30
$90
$30

Double Declining balance Method

Year 1
Year2
Year 3

Depreciation expense =Book Value/Useful life in years * 2
Book Value
Depreciation expense
$100...


Anonymous
I was struggling with this subject, and this helped me a ton!

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