Problem 8-2A (Algo) Depreciation methods LO P1

A machine costing $211,000 with a four-year life and an estimated $19,000 salvage value is installed in Luther Company's factory on January 1. The factory manager estimates the machine will produce 480,000 units of product during its life. It actually produces the following units: 123,100 in Year 1, 123,200 in Year 2, 119,600 in Year 3, 124,100 in Year 4. The total number of units produced by the end of Year 4 exceeds the original estimatethis difference was not predicted. Note: The machine cannot be depreciated below its estimated salvage value.

Required:

Compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method.(Round your per unit depreciation to 2 decimal places. Round your answers to the nearest whole dollar.)

Straight Line Units of Production DDB

Straight Line

Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Straight-line depreciation.

Straight-Line Depreciation

Year Depreciation Expense

1.

2.

3.

4

Total

Units of Production

Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Units of production.

Units of production

Year units. depreciation units depreciation per unit Depreciation Expense

1 123,100

2 123,200

3 119,600

4 124,100

Total

DDB

Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Double-declining-balance.

DDB Depreciation for the period End of period

Year Beginning of period book value Depreciation rate Depreciation expense accumulated depreciation book value

1 %

2 %

3 %

4 %

total

Problem 8-6A (Algo) Disposal of plant assets LO C1, P1, P2

[The following information applies to the questions displayed below.]

Onslow Co. purchased a used machine for $144,000 cash on January 2. On January 3, Onslow paid $8,000 to wire electricity to the machine and an additional $1,600 to secure it in place. The machine will be used for six years and have a $17,280 salvage value. Straight-line depreciation is used. On December 31, at the end of its fifth year in operations, it is disposed of.

Problem 8-6A (Algo) Part 1

Required:

1.Prepar journal entries to record the machine's purchase and the costs to ready it for use. Cash is paid for all costs incurred.

Record the purchase of a used machine for $144,000 cash.

Date General Journal Debit Credit

Jan 02

Record the costs of $8,000 incurred on the used machine

Date General Journal Debit Credit

Jan 03

Record the cost of $1,600 for an operating platform.

Date General Journal Debit Credit

Jan 03

Problem 8-6A (Algo) Disposal of plant assets LO C1, P1, P2

[The following information applies to the questions displayed below.]

Onslow Co. purchased a used machine for $144,000 cash on January 2. On January 3, Onslow paid $8,000 to wire electricity to the machine and an additional $1,600 to secure it in place. The machine will be used for six years and have a $17,280 salvage value. Straight-line depreciation is used. On December 31, at the end of its fifth year in operations, it is disposed of.

Problem 8-6A (Algo) Part 2

2.Prepar journal entries to record depreciation of the machine at December 31.

Journal entry worksheet

1 Record the first year year-end adjusting entry for the depreciation expense of the used machine.

Date General Journal Debit Credit

Dec31

2 Record the year of disposal year-end adjusting entry for the depreciation expense of the used machine.

Date General Journal Debit Credit

Dec 31

Problem 8-6A (Algo) Disposal of plant assets LO C1, P1, P2

[The following information applies to the questions displayed below.]

Onslow Co. purchased a used machine for $144,000 cash on January 2. On January 3, Onslow paid $8,000 to wire electricity to the machine and an additional $1,600 to secure it in place. The machine will be used for six years and have a $17,280 salvage value. Straight-line depreciation is used. On December 31, at the end of its fifth year in operations, it is disposed of.

Problem 8-6A (Algo) Part 3

3.Prepar journal entries to record the machine's disposal under each separate situation: (a) it is sold for $21,500 cash and (b) it is sold for $86,000 cash.

Journal entry worksheet

1 Record the sale of the used machine for $21,500 cash.

Date General Journal Debit Credit

Dec 31

2 Record the sale of the used machine for $86,000 cash.

Date General Journal Debit Credit

Dec 31