Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

New lithographic equipment, acquired at a cost of $859,200 on March 1 at the beginning of a fiscal year, has an estimated useful life of

New lithographic equipment, acquired at a cost of $859,200 on March 1 at the beginning of a fiscal year, has an estimated useful life of 5 years and an estimated residual value of $96,660. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year.

In the first week of the fifth year, on March 4, the equipment was sold for $141,422.

Required:
1. Determine the annual depreciation expense for each of the estimated 5 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.
2. Journalize the entry to record the sale, assuming the manager chose the double-declining-balance method.
3. Journalize the entry to record the sale in (2), assuming that the equipment was sold for $96,962 instead of $141,422.

Starting Questions

1. Determine the annual depreciation expense for each of the estimated 5 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.

a. Straight-line method

Additional Instruction

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,
Year Depreciation Expense End of Year Book Value, End of Year
1
2
3
4
5

General Journal

2. On March 4, journalize the entry to record the sale, assuming the manager chose the double-declining-balance method.

General Journal Instructions

PAGE 1

JOURNAL

ACCOUNTING EQUATION

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

3. On March 4, journalize the entry to record the sale in (2), assuming that the equipment was sold for $96,962 instead of $141,422.

General Journal Instructions

PAGE 1

JOURNAL

ACCOUNTING EQUATION

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Transfer Pricing Audits In China

Authors: J. Li, A. Paisey

2007th Edition

0230001963, 978-0230001961

More Books

Students also viewed these Accounting questions

Question

How do books become world of wonder?

Answered: 1 week ago