Question
On January 2, 2021, Cohen Incorporated purchased machinery that cost $150,000 with a residual value of $15,000. The expected useful life of the machinery is
On January 2, 2021, Cohen Incorporated purchased machinery that cost $150,000 with a residual value of $15,000. The expected useful life of the machinery is 6 years and 13,500 units. It is expected to produce 2,000 units in year 1; 2,500 units in year 2; 3,000 units in year 3; 2,500 units in year 4; 2,500 units in year 5; and 1,000 units in year 6.
A. Prepare a depreciation schedule for the assets entire useful life using each of the following methods:
Straight Line
Production (Units of Production)
Double Declining Balance
B. Prepare the journal entry to record depreciation expense for year 2 for each of the Depreciation Methods (a total of 3 journal entries).
C. Assume that the company decided to sell the equipment in year 3 for $85,000 in cash. Prepare the required journal entry for each of the Depreciation Methods (a total of 3 journal entries).
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