Accounting 1120

1 / 28

# Accounting 1120 - PowerPoint PPT Presentation

Accounting 1120. Final Study Guide. 1. What is depreciation? Which plant asset is not depreciated?. Depreciation is the allocation of a plant asset’s cost to expense over its useful life. It is NOT a process of valuation

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.

## PowerPoint Slideshow about 'Accounting 1120' - mae

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

### Accounting 1120

Final Study Guide

• Depreciation is the allocation of a plant asset’s cost to expense over its useful life.
• It is NOT a process of valuation
• It does NOT mean that the business sets aside cash to replace an asset when it is used up
• LAND is not depreciated.
2. Amount of accumulated Depreciation

32,000-4,000=28,000

28,000 / 4 (years of useful life) = 7,000

3. Long-Term/Short-Term Liabilities
• Long Term Liabilities
• Obligations not expected to be paid within the longer of one year or the company's operating cycle
• Short Term Liabilities
• Obligations that will be paid within one year or less
4. Accrued Interest Expense

4,000*.06*2/12 = \$40

6. Balance of Retained Earnings
• Beginning Retained Earnings + Net Income = New Balance Retained Earnings
• 72,000+8,000 = \$80,000
• Retained Earnings – Dividend Payment
• 80,000-7,450 = 72,550
9. Statement of Cash Flow Sections
• Cash flows from operating activities
• Depreciation, increases and decreases in inventory, accounts receivable, accounts payable, accrued liabilities
• Cash flows from investing activities
• Acquisition or sale of plant assets
• Cash flows from financing activities
• Notes payable, stocks (including dividends, treasury stock), bonds – borrowing money and repaying creditors

Amounts received in advance from customers for future products or services are __liabilities___.

12. Partnership Equity Balance

\$72,000 (agreed upon market value of the asset) – 15,000 (note payable secured by the asset) = 57,000

13. Cumulative Preferred Stock Dividends

1,500 (shares) * 25 (par value) * .04 = 1,500 dividends owed to preferred stockholders

First year – paid 1,100 dividends – still owe 400

Second year – paid 400 from last year + 1,500 from this year = 1,900

14. Stock Split

The par value = \$4 (\$12 / 3)

Number of shares outstanding = 45,000 (15,000 * 3)

Market Value = \$8 (\$24 /3)

16. Depreciation

32,000-2,000=30,000

30,000/10 = 3,000

Three years of straight line depreciation = 9,000

30,000-9,000 = 21,000

21,000/5 = 4,200

17. Treasury Stock

100*3 (profit made on stock 33-30=3) \$300

100*-2 (loss from selling stock 28-30 =-2) = -200

Balance = \$100

18. Gain/Loss

\$7,500 – 6,800 = \$700 loss

20. Issuing Bonds

Discount

Discount

21. Depreciation

Use the depreciation worksheet in Excel

23. Payroll

INCOME

6,100 (monthly salary) * 12 = 73,200

73,200 * .05 = 3,660 Bonus

Total Salary and Bonus – 73,200+3,660 = 76,860

DEDUCTIONS

Federal Income Tax 810*12 = 9,720+932 = 10,652.00

State Income Tax 80*12 = 960+70 = 1,030.00

FICA Tax 76,860*.08 = 6,148.80

United Fund 76,860*.01 = 768.60

Insurance \$20*12 = 240.00

TOTAL DEDUCTIONS 18,840.00

23. Payroll

Gross Pay = \$76,860

Total Deductions = -18,840

Net Pay = \$58,020

24. Issuing Stock

Common Stock 2,000*2 = 4,000

Paid-in-Capital in Excess of Par = 66,000 (70,000-4,000)

24. Issuing Stock