Question
Markham Manufacturing Inc. purchased and later sold a machine. Details relating to the machine are below. Acquisition cost $216,000 Date of purchase 1-May-20 Date put
Markham Manufacturing Inc. purchased and later sold a machine. Details relating to the machine are below. Acquisition cost $216,000 Date of purchase 1-May-20 Date put into use 1-Aug-20 Estimated useful life in years 8 Estimated residual value $36,000 Date of disposal 1-Apr-24 Proceeds of disposal $150,000 REQUIRED: Complete a depreciation chart for this machine and then answer the following questions. The company has a December 31 year end. ENTRY RULES: Enter digits (whole numbers) only - no commas, dollar signs, decimal points or pennies. What is the depreciable amount of the machine? 180000 What is this machine's ANNUAL depreciation expense? 22500 How much depreciation expense should be recorded in 2020? 9375 How is depreciation recorded at year end? A. increase Depreciation Expense, decrease Equipment B. increase Depreciation Expense, decrease Accumulated Depreciation C. increase Depreciation Expense, decrease Cash D. increase Depreciation Expense, increase Accumulated Depreciation E. decrease Cash, decrease Equipment F. decrease Cash, increase Accumulated Depreciation G. decrease Cash, increase Equipment Expense H. increase Equipment Expense, increase Accumulated Depreciation Enter the letter that corresponds to your choice. (A B C D E F G H) D What is the accumulated depreciation at the end of 2022? 54375 How much depreciation expense should be recorded in 2024, the year of the disposal? 90000 What is the book value on the disposal date? 126000 What is the gain or loss on the disposal? If there is a loss, enter it as a negative number (i.e. as -1000). If there is a gain, enter it as a positive number (i.e., as 1000). Enter 0 if there is neither a gain nor a loss. 24000 How will the disposal of the machine be recorded? Ignore the partial-year depreciation entry. (4 marks) A. decrease Equipment, decrease Accumulated Depreciation, increase Depreciation Expense, increase Cash B. decrease Equipment, increase Accumulated Depreciation, decrease Depreciation Expense, increase Cash C. decrease Equipment, decrease Accumulated Depreciation, increase Gain on Disposal, increase Cash D. decrease Equipment, increase Accumulated Depreciation, decrease Gain on Disposal, increase Cash E. decrease Equipment, decrease Accumulated Depreciation, increase Loss on Disposal, increase Cash F. decrease Equipment, increase Accumulated Depreciation, decrease Loss on Disposal, increase Cash
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started