New lithographic equipment, acqulred at a cost of S772,800 on March 1 of Year (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $86,940. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On March 4 of Year 5, the equipment was sold for $130,585.
Instructions New lithographic equipment, acquired at a cost of $772.800 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $86,940. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On March 4 of Year 5, the equipment was sold for S130.585. 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. Joumalize the entry to record the sale assuming that 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 $87,105 instead of $130,585. Refer to the Chart of Accounts for exact wording of account titles. 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 a. Straight-line method Accumulated Depreciation, End of Year Year Depreciation Expense $ Book Value, End of Year S 1 2 3 4 5 b. Double-declining balance method Accumulated Depreciation, End of Year Depreciation Expense Book Value, End of Year Year 1 2 3 Journal 2. On March 4, the entry to record the sale assuming that the manager chose the double-declining-balance method. Refer to the Chart of Accounts for exact wording of account titles. PAGE 1 ACCOUNTING EQUATION JOURNAL DATE DESCRIPTION POST. REF DEBIT CREDIT ASSETS LUBILITIES EQUITY ! 1 4 3. On March 4, the entry to record the sale in (2) assuming that the equipment was sold for $87, 105 mistead of $130,585. Refer to the Chart of Accounts for exact wording of account titles PAGE 1 ACCOUNTING EQUATION JOURNAL DATE DESCRIPTION POST. REF DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 1 Chart of Accounts ASSETS REVENUE 410 Sales 110 Cash 111 Petty Cash 112 Accounts Receivable 610 Interest Revenue 620 Gain on Sale of Delivery Truck 621 Gain on Sale of Equipment EXPENSES 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Supplies 119 Prepaid Insurance 120 Land 123 Delivery Truck 124 Accumulated Depreciation-Delivery Truck 125 Equipment 126 Accumulated Depreciation-Equipment 130 Mineral Rights 131 Accumulated Depletion 132 Goodwill 133 Patents 510 Cost of Merchandise Sold 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Delivery Truck 523 Delivery Expense 524 Repairs and Maintenance Expense 529 Selling Expenses 531 Rent Expense 532 Depreciation Expense-Equipment 533 Depletion Expense 534 Amortization Expense-Patents 535 Insurance Expense 536 Supplies Expense 539 Miscellaneous Expense 710 Interest Expense 720 Loss on Sale of Delivery Truck 721 Loss on Sale of Equipment LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable
