Yukon Productions Corp. purchased equipment on March 1, 2018, for $70,000. The company estimated the equipment would have a useful life of three years and produce 12,000 units, with a residual value of $10,000. During 2018, the equipment produced 4,900 units. On November 30, 2019, the machine was sold for $18,000 and had produced 5,600 units that year.

Instructions

(a) Record all the necessary journal entries for the years ended December 31, 2018 and 2019, using the following depreciation methods:

(1) Straight-line,

(2) Double-diminishing-balance, and

(3) Units-of-production.

(b) Complete the following schedule for each method of depreciation and compare the total expense over the two-year period.

Transcribed Image Text:

Straight- Double-Diminishing-Units-of- Line Balance Production Depreciation expense 2018 2019 Total depreciation expense for two years +Loss (or -gain) on disposal Net expense for two years