Instructions New lithographic equipment, acquired at a cost of $800,000 on March 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $90,000. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining balance method was selected. In the first week of the fifth year, on March 4, the equipment was sold for $134,570. Required: 1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by (a) the straight-line method and (b) the double-declining- balance method. Round your answers to the nearest whole dollar. 2. Journalize the entry to record the sale assuming the manager chose the double-declining-balance method. Refer to the Chart of Accounts for exact wording of account titles. 3. Journalize the entry to record the sale in (2), assuming that the equipment was sold for $88,180 instead of $134,570. Refer to the Chart of Accounts for exact wording of account titles. Chart of Accounts CHART OF ACCOUNTS General Ledger ASSETS REVENUE 110 Cash 410 Sales 111 Petty Cash 610 Interest Revenue 112 Accounts Receivable 620 Gain on Sale of Delivery Truck 114 Interest Receivable 621 Gain on Sale of Equipment 115 Notes Receivable 116 Merchandise Inventory EXPENSES 117 Supplies 510 Cost of Merchandise Sold 119 Prepaid Insurance 520 Salaries Expense 120 Land 521 Advertising Expense 123 Delivery Truck 522 Depreciation Expense-Delivery Truck 523 Delivery Expense 124 Accumulated Depreciation-Delivery Truck 524 Repairs and Maintenance Expense 125 Equipment 126 Accumulated Depreciation-Equipment 529 Selling Expenses Chart of Accounts 130 Mineral Rights 531 Rent Expense 131 Accumulated Depletion 532 Depreciation Expense-Equipment 132 Goodwill 533 Depletion Expense 133 Patents 534 Amortization Expense-Patents 535 Insurance Expense LIABILITIES 536 Supplies Expense 210 Accounts Payable 539 Miscellaneous Expense 211 Salaries Payable 710 Interest Expense 213 Sales Tax Payable 720 Loss on Sale of Delivery Truck 214 Interest Payable 721 Loss on Sale of Equipment 215 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends Starting Questions Determine the annual depreciation expense for each the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by (a) the straight-line method and (b) the double-declining-balance method. Round your answers to the nearest whole dollar. Enter all amounts as a positive numbers. a. Straight-line method Accumulated Depreciation, Year Depreciation Expense End of Year Book Value, End of Year 1 $ $ $ 2 3 4 5 b. Double-declining-balance method Accumulated Depreciation, End of Year Year Depreciation Expense Book Value, End of Year 1 $ $ $ b. Double-declining-balance method Accumulated Depreciation, Year Depreciation Expense End of Year Book Value, End of Year 1 $ $ $ 2 3 4 01 Journal 2. On March 4, journalize the entry to record the sale assuming the manager chose the double-declining-balance method. Refer to the Chart of Acco of account titles. JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT ACCOLIN ASSETS 1 1 2 3 4 3. On March 4, journalize the entry to record the sale in (2), assuming that the equipment was sold for $88, 180 instead of $134,570. Refer to the Che wording of account titles. JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT ACCOLIN ASSETS 1 2 3 4
