Problem #1

On January 1, 2021, a company purchased machinery costing $70,000. The estimated useful life is 5 years, and the salvage value of the asset is expected to be $10,000. The machinery was used for 2,000 hours in Year 1, 2,010 hours in Year 2, 2,050 hours in Year 3, 2,045 hours in Year 4, and 1,010 from January 1 - June 30 of the fifth year. The depreciation rate is $7.50 per hour.

c) Using the above information and the Units of Production Method:

1) Provide the journal entry to record the depreciation expense for Year 1

(show work for calculation of amount)

2) Provide the journal entry to record the depreciation expense for Year 2

(show work for calculation of amount)

3) Provide the journal entry to record the depreciation expense for Year 3

(show work for calculation of amount)

4) Assume the company sold the equipment at the end of Year 3 for $30,000.

Provide the appropriate journal entries to record the sale.