At the start of Year 3, the sisters purchase property, plant, equipment, and intangible assets to ensure that HHEC.com is ready to handle the large volume of sales they expect. Throughout the year they continue to purchase property, plant, and equipment and dispose of some of their older equipment. As HHEC.coms bookkeeper, Sophia is unsure of how to record these transactions and how to calculate the annual amount of depreciation expense on these assets. Sophia provides you with a list of purchases and disposals during the year and asks you to record these transactions in the general journal. She then asks you to calculate annual depreciation expense under various depreciation methods.
HHEC HAPPY HOME Environmental Cleaning Task 5: At the start of Year 3, the sisters purchase property, plant, equipment, and intangible assets to ensure that HHEC.com is ready to handle the large volume of sales they expect. Throughout the year they continue to purchase property, plant, and equipment and dispose of some of their older equipment. As HHEC.com's bookkeeper, Sophia is unsure of how to record these transactions and to calculate the annual amount of depreciation expense on these assets. Sophia provides you with a list of purchases and disposals during the year and asks you to record these transactions in the general journal. She then asks you to calculate annual depreciation expense under various depreciation methods. At the end of Year 2. HHEC reported the following property, plant, and equipment 135,000 Building Accumulated Depreciation - Building Trucks Accumulated Depreciation - Trucks Land Office Equipment Accumulated Depreciation - Office Equipment 150,000 15.000 350,000 35,000 315,000 275,000 78,000 7,800 70,200 Total Property, plant, and equipment 795,200 During Year 3, the following selected cash transactions occurred. Determine the appropriate Journal Entries. January 1 Purchased land for $225,000. January 1 Purchased packaging equipment for 450,000. January 1 Purdhased a patent for $75,000. March 1 Sold office equipment that cost 78,000 when purchased on January 1, Year 2. The equipment was sold for $75,000 May 1 Sold land purchased on June 1, Year 2 for 175,000. The land cost $200,000. Supplemental Information: The packaging equipment that HHEC.Com purchased on January 1, Year 3 has an estimated useful life of 5 years and an estimated residual value of $30,000. Calculate equipment deprecation expense for Year 3 and Year 4 under each of the following methods: Straight Line, Double Declining balance and Units of Production. The equipment is estimated to produce 150,000 units. During Year 3 and Year 4, the equipment produced 25,000 and 40,000 units, respectively. The patent that HHEC.Com purchased on January 1, Year 3 has an estimated useful life of 20 years. Record the Amortization expense for years and 4. ANSWER Journal Entries for recordable Transactions: The patent that HHEC.Com purchased on January 1, Year 3 has an estimated useful life of 20 years. Record the Amortization expense for years 3 and 4. ANSWER Journal Entries for recordable Transactions: Depreciation Methods: Year 3 Year 4 Straight-line Double-declining balance Units-of-production
