Question 18 (4 points)

On January 1, 2021 Advantage Co. purchased a new machine for $4,500. The machine has a useful life of 5 years, and a residual value of $500. It is estimated that the machine will produce 4,000 units over its lifetime (1,500 units in 2021; 1,000 units in 2022; 500 units each remaining year). Advantage closes its books once a year, on December 31st.

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If Advantage uses the Double-Declining-Balance Method of depreciation, how much accumulated depreciation will Advantage recognize on its 12/31/2022 Balance Sheet in relation to this machine?

Question 18 options:

	$2,880
	$1,080
	$1,800
	$3,600

Part 2: Sale of Fixed Assets

Question 19 (4 points)

On January 1, 2021 Madison Co. purchased a machine for $600,000. The machine has a useful life of 5 years, and a residual value of $100,000. Madison Co. uses the straight-line method to account for its depreciation. On January 1, 2023 Madison Co. sells the machine.

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Assume Madison Co. sells the machine for $400,000 cash. Please provide the journal entry Madison will record in relation to the sale:

Question 19 options:

	Dr. Cash $400,000 Dr. Machine $400,000
	Dr. Accumulated Depreciation $400,000 Cr. Machine $400,000
	Dr. Cash $400,000 Cr. Accumulated Depreciation $200,000 Cr. Machine $200,000
	Dr. Cash $400,000 Dr. Accumulated Depreciation $200,000 Cr. Machine $600,000

Question 20 (4 points)

On January 1, 2021 Madison Co. purchased a machine for $600,000. The machine has a useful life of 5 years, and a residual value of $100,000. Madison Co. uses the straight-line method to account for its depreciation. On January 1, 2023 Madison Co. sells the machine.

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Assume Madison Co. sells the machine for $407,812 cash. Please provide the journal entry Madison will record in relation to the sale:

Question 20 options:

	Dr. Accumulated Depreciation $407,812 Cr. Machine $407,812
	Dr. Cash $407,812 Dr. Accumulated Depreciation $200,000 Cr. Machine $600,000 Cr. Loss $7,812
	Dr. Cash $407,812 Cr. Machine $407,812
	Dr. Cash $407,812 Dr. Accumulated Depreciation $200,000 Cr. Machine $600,000 Cr. Gain $7,812

Question 21 (4 points)

On January 1, 2021 Madison Co. purchased a machine for $600,000. The machine has a useful life of 5 years, and a residual value of $100,000. Madison Co. uses the straight-line method to account for its depreciation. On January 1, 2023 Madison Co. sells the machine.

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Assume Madison Co. sells the machine for $299,999 cash. Please provide the journal entry Madison will record in relation to the sale:

Question 21 options:

	Dr. Cash $299,999 Dr. Accumulated Depreciation $200,000 Dr. Gain 100,001 Cr. Machine $600,000
	Dr. Cash $299,999 Dr. Accumulated Depreciation $200,000 Dr. Loss 100,001 Cr. Machine $600,000
	Dr. Accumulated Depreciation $299,000 Cr. Machine $299,000
	Dr. Cash $299,999 Cr. Machine $299,000

Part 3: Miscellaneous Multiple Choice

Question 22 (5 points)

Wellington Inc., a calendar-year end company, buys PPE on 9/30/2021 for $800,000. The machine is estimated to have a residual value of $100,000 and a useful life of 14 years. Assuming Wellington, Inc. uses the straight-line method to estimate depreciation, how much depreciation expense will Willington, Inc. recognize in its 12/31/2021 financials due to this PPE?

Question 22 options:

	$16,667
	$25,000
	$50,000
	$12,500