Accouting Study Guide Help Please

timer Asked: Feb 23rd, 2015

Question description

The Remove-U-Tattoo Clinic purchased a surgical laser for $84,000 on January 1, 2014.  The estimated salvage value is $4,000.  The laser has a useful life of five years and the clinic expects to use it 10,000 hours. 

It was used for 900 hours in 2014; 2,100 hours in 2015; 2,400 hours in 2016. 


Showing all of your computations, compute the book value and the balance in the Accumulated Depreciation Account for December 31, 2015 under each of the following three methods after the depreciation for 2015 has been recorded:   

(1)  Straight-line: 

2015 accumulated depreciation ____________________

  2015 book value ____________________ 

(2)  Units-of-activity: 

    2015 accumulated depreciation ____________________   

  2015 book value ____________________ 

(3)  Double-declining balance: 

2015 accumulated depreciation ____________________

2015 book value ____________________ 

Exercise #2  10 points

On January 1, Steff Corporation had 80,000 shares of no-par common stock issued. 5,000 shares are held as treasury stock. The stock has a stated value of $5 per share. During the year, the following transactions occurred.   

  Apr.  1  Issued 12,000 additional shares of common stock for $18 per share. 

  June  15  Declared a cash dividend of $1 per share to stockholders of record on June 30. 

  July  10  Paid the $1 cash dividend. 

  Dec.  1  Purchased 7,000 additional shares of common stock for $17 per share. 

  Dec.  15  Declared a cash dividend on outstanding shares of $1.20 per share to        shareholders of record on December 31. 

Instructions:  Prepare the entries, if any, on each of the dividend dates. 

Essay Question:  30 Points

Dan Ville, the President and CEO of Pick ‘Em Up, Inc., a waste management firm, was recently hospitalized, suffering from exhaustion and a heart ailment. Immediately prior to his hospitalization, Pick‘Em Up had experienced a sharp decline in its stock price, and trading activity became almost nonexistent. The primary reason for this was concern expressed in the media over a new untested pick up management system implemented by the company. Mr. Williamson had been unwilling to submit the procedure to testing before implementation, but he reluctantly agreed to limited tests after the system was operational. No problems have been identified by the tests to date.

The other members of management called a meeting to determine what they should do.JohnKing, Sales Manager, suggested that the company purchase a large number of shares of treasury stock. In that way, investors might notice that activity had picked up, and might decide to buy more shares. This plan would use up most of the company's available cash, so that there will be no money available for a cash dividend. Planet Systems has paid cash dividends every quarter for over ten years.


1.  Is Mr. Kings’s suggestion ethical? Explain.

2.    Is it ethical to discontinue the cash dividend? Explain. 

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