1.) On-Time Delivery Company acquired an adjacent lot to construct a new warehouse, paying $29,000 in cash and giving a short-term note for $262,000. Legal fees paid were $2,430, delinquent taxes assumed were $9,300, and fees paid to remove an old building from the land were $21,200. Materials salvaged from the demolition of the building were sold for $4,400. A contractor was paid $884,600 to construct a new warehouse.

Determine the cost of the land to be reported on the balance sheet. $_____

2.)

Equipment acquired on January 8 at a cost of $100,870 has an estimated useful life of 12 years, has an estimated residual value of $9,550, and is depreciated by the straight-line method.

a.

What was the book value of the equipment at December 31 the end of the fifth year?

b.

Assuming that the equipment was sold on April 1 of the sixth year for $54,047, journalize the entries to record (1) depreciation for the three months until the sale date, and (2) the sale of the equipment. Refer to the Chart of Accounts for exact wording of account titles.

a. What was the book value of the equipment at December 31 the end of the fifth year?

b. Assuming that the equipment was sold on April 1 of the sixth year for $54,047, journalize the entries to record the following (refer to the Chart of Accounts for exact wording of account titles):

1. Depreciation for the three months until the sale date.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2

2. The sale of the equipment. Round your final answers to the nearest whole dollar.

PAGE 2

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4

3.)

Equipment acquired on January 6 at a cost of $513,540 has an estimated useful life of 20 years and an estimated residual value of $67,940.

a.

What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation?

b.

What was the book value of the equipment on January 1 of Year 4?

c.

Assuming that the equipment was sold on January 3 of Year 4 for $428,880, journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles.

d.

Assuming that the equipment had been sold on January 3 of Year 4 for $459,160 instead of $428,880, journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles.

a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation?

Year 1 depreciation expense
Year 2 depreciation expense
Year 3 depreciation expense

b. What was the book value of the equipment on January 1 of Year 4?

4.)

Comparing three depreciation methods

Dexter Industries purchased packaging equipment on January 8 for $90,000. The equipment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $3,600. The equipment was used for 7,200 hours during Year 1, 5,400 hours in Year 2, and 5,400 hours in Year 3.

Required:

1. Determine the amount of depreciation expense for the three years ending December 31, by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by each method. Round the final answers for each year to the nearest whole dollar.

Depreciation Expense
Year	Straight-Line Method			Units-of-Activity Method			Double-Declining-Balance Method
Year 1		$			$			$
Year 2		$			$			$
Year 3		$			$			$
Total		$			$			$

2. What method yields the highest depreciation expense for Year 1?

3. What method yields the most depreciation over the three-year life of the equipment?