Sabel Co. purchased assembly equipment for $648,000 on January 1, 2016. Sabels financial condition immediately prior to the purchase is shown in the following horizontal statements model:

The equipment is expected to have a useful life of 240,000 machine hours and a salvage value of $24,000. Actual machine-hour use was as follows:

2016	60,000
2017	65,000
2018	46,000
2019	40,000
2020	14,000

Required:

a.

Compute the depreciation for each of the five years, assuming the use of units-of-production depreciation.

Years	Depreciation
2016
2017
2018
2019
2020

b.

Assume that Sabel earns $234,000 of cash revenue during 2016. Record the purchase of the equipment and the recognition of the revenue and the depreciation expense for the first year in a financial statements model like the preceding one. (In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, NC for net change in cash and NA to indicate the element is not affected by the event. Enter any decreases to account balances with a minus sign.)

SOBEL CO.

Horizontal Statements Model for 2016

Balance Sheet

Income Statement

Assets

Stockholders Equity

Revenue

Expense

=

Net Income

Cash Flow

Event

Cash

+

Book Value of Equipement

=

Common Stock

+

Retained Earnings

=

Balance

840,000

+

=

840,000

+

=

NA

Equipement

+

=

+

=

Revenue

+

=

+

=

Deperciation

+

=

+

=

Balance

840,000

+

0

=

840,000

+

0

0

0

=

0

0

c.

Assume that Sabel sold the equipment at the end of the fifth year for $25,000. Record the general journal entry for the sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Record entry for sale of equipment at the end of fifth year.

Event

General Journal

Debit

Credit

1

*Enter debits before credits