At the beginning of Year 1, Copeland Drugstore purchased a new computer system for $200,000. It is expected to have a five-year life and a $30,000 salvage value.

Exercise 8-9A (Algo) Part a

Required a. Compute the depreciation for each of the five years, assuming that the company uses: (1) Straight-line depreciation. (2) Double-declining-balance depreciation.

A. Compute the depreciation for each of the five years, assuming that the company uses straight-line depreciation.

Straight-line depreciation for each year

B. Compute the depreciation for each of the five years, assuming that the company uses double-declining-balance depreciation.

	Double-Declining-Balance
Year 1
Year 2
Year 3
Year 4
Year 5

C. Record the purchase of the computer system and the depreciation expense for the first year under straight-line and double-declining-balance methods in a horizontal statements model. (In the Statement of Cash Flows column, use the initials OA to designate operating activity, IA for investing activity, and FA for financing activity. Leave blank to indicate that an element is not affected by the event. Enter any decreases to account balances and cash outflows with a minus sign.)

COPELAND DRUGSTORE
Horizontal Statements Model
Balance Sheet					Income Statement					Statement of Cash Flows
Assets			=	Stockholders Equity	Revenue		Expenses	=	Net Income
Cash	+	Book Value of Computer	=	Retained Earnings
	+		=					=
Straight-line depreciation
	+		=					=
Double-declining-balance depreciation
	+		=					=

D. Prepare the journal entries to recognize depreciation for each of the five years, assuming that the company uses straight-line depreciation. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

E. Prepare the journal entries to recognize depreciation for each of the five years, assuming that the company uses double-declining-balance depreciation. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)