On September 30 of the current year, a company acquired and placed in service a machine at a cost of $700,000. It has been estimated that the machine has a service life of five years and a salvage value of $40,000. Using the double-declining-balance method of depreciation, prepare a schedule showing depreciation amounts for the current year and the next four years (round answers to the nearest dollar). The company closes its books on December 31 of each year.

	Depreciation for the Period			End of Period
Year		Depreciation Rate	Depreciation Expense	Accumulated Depreciation	Book Value
1
2
3
4
5
6

On April 1, 2015, a company disposed of equipment for $14,200 cash that had cost $35,000 on January 1, 2010. The equipment had a salvage value of $5,000 and a useful life 10 years. The double-declining-balance depreciation method was used. On December 31, 2014, accumulated depreciation was $20,664. Prepare a journal entry to record depreciation for 2015 up to the date of disposal of the equipment and prepare a journal entry to record the disposal of the equipment.

Apr.	1
	1

ABC Corporation issued 14%, 5-year bonds with a par value of $5,000,000 on January 1, 2015. Interest is to be paid semiannually on each June 30 and December 31. The bonds were issued at $5,368,035 cash when the market rate for this bond was 12%.

(a) Prepare the general journal entry to record the issuance of the bonds on January 1, 2015.

1/1/15

(b) Show how the bonds would be reported on ABC's balance sheet at January 1, 2015.

Long-Term liabilities:

(c) Assume that ABC uses the effective interest method for amortizing any discount or premium on bonds. Prepare the general journal entry to record the first semiannual interest payment on June 30, 2015. SHOW YOUR CALCULATIONS!

6/30/15

(d) Assume instead that ABC uses the straight-line method for amortizing any discount or premium on bonds. Prepare the general journal entry to record the first semiannual interest payment on June 30, 2015. SHOW YOUR CALCULATIONS!

6/30/15

(e) Assume that ABC uses the effective interest method for amortizing any discount or premium on bonds. Prepare the general journal entry to record the second semiannual interest payment on December 31, 2015. SHOW YOUR CALCULATIONS!

12/31/15