QUESTION 4 (25 MARKS) Part a On January 2, 2014, a company purchased a new piece of Equipment. The Equipment cost $680,000 and has an expected useful life of 10 years. Shipping, installation and set-up were an additional $34,000. At the end of the useful life, the company expects the Equipment to have a residue of $64,000. i) State the journal entry necessary to record the purchase of the equipment. (1 mark) ii) What is the book value of the equipment on December 31, 2016 if the company uses the straight-line method of depreciation? (3 marks) iii) If the company uses the double declining balance method of depreciation, what is the depreciation expense for 2015? (3 marks) iv) Assuming that the company uses the straight-line method of depreciation and sells the equipment on September 30, 2017 for $480,000, journalize the entry to record the sale. Prepare the statement of disposal clearly showing the loss or gain on disposal. v) Assuming that the company uses the straight-line method of depreciation. During the first (5 marks) week in January of 2017, major overhaul of the equipment is completed at a cost of $68,360. The costs extended its useful life for 5 years beyond the 10 years originally estimated. Residual value at the end of 15 years will be $8,000. What is the depreciation expense for each of the remaining years? (4 marks) Part b Trax Company is authorized to issue 500,000 shares of $1 par common stock. The company issued 80,000 shares at $4 per share, and all 80,000 shares are outstanding. When the market price of common stock was $5 per share, Trax distributed a 10% stock dividend. Later, Trax declared and paid a $0.50 per share cash dividend. Required i) State the journal entries made to record the original issue of the 80,000 shares at $4.00 each. (2 marks) ii) Journalize the distribution of the stock dividend. (3 marks) iii) Journalize both the declaration and the payment of the cash dividend. (4 marks) END OF QUESTION PAPER Happy Holidays!! F b