Question

Pool Corporation, Inc., is the world's largest wholesale distributor of swimming pool supplies and equipment. Assume Pool Corporation purchased for cash new loading equipment for the warehouse on January 1 of Year 1, at an invoice price of $82,500. It also paid $3,400 for freight on the equipment, $2,000 to prepare the equipment for use in the warehouse, and $1,150 for insurance to cover the equipment during operation in Year 1. The equipment was estimated to have a residual value of $4,000 and be used over three years or 27,500 hours.

Required:
1. Record the purchase of the equipment, freight, preparation costs, and insurance on January 1 of Year 1.
2. Create a depreciation schedule assuming Pool Corporation uses the straight-line method.
3. Create a depreciation schedule assuming Pool Corporation uses the double-declining-balance method.
4. Create a depreciation schedule assuming Pool Corporation uses the units-of-production method, with actual production of 8,700 hours in Year 1; 8,100 hours in Year 2; and 9,300 hours in Year 3.
5. On December 31 of Year 2 before the year-end adjustments, the equipment was sold for $26,000. Record the sale of the equipment assuming the company used the straight-line method.

1. Record the purchase of equipment, freight preparation costs, and insurance.

Date	General Journal	Debit	Credit
January 01

2. Create a depreciation schedule assuming Pool Corporation uses the straight line method. (Do not round intermediate calculations. Round your final answer to nearest whole dollar.

Year	Depreciation Expense	Accumulated Depreciation	Net Book Value
1
2
3

3. Create a depreciation schedule assuming Pool Corporation uses the double-declining-balance method. (Do not round intermediate calculations. Round your final answer to nearest whole dollar.

Year	Depreciation Expense	Accumulated Depreciation	Net Book Value
1
2
3

4. Create a depreciation schedule assuming Pool Corporation uses the units-of-production method, with actual production of 8,700 hours in Year 1; 8100 hours in Year 2; and 9,300 hours in Year 3.  (Do not round intermediate calculations. Round your final answer to nearest whole dollar.

Year	Depreciation Expense	Accumulated Depreciation	Net Book Value
1
2
3

5. On December 31 of Year 2, the equipment was sold for $26,000. Record the sale of the equipment assuming the company used the straight-line method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

1. Record the depreciation expense assuming the company uses the straight-line method.

Date	General Journal	Debit	Credit
December 31

   2. Record the disposal of equipment assuming the company used the straight-line method.

Date	General Journal	Debit	Credit
December 31

Answer 1

Answer is given below with all working

Debit General Journal Credit 1 Date $82,500 January 01 Equipment Account To Cash $82,500 (being new Equipment purchased) $3,400 January 01 Equipment Account To Cash $3,400 (Being freight expenses incurred) January 01 Equipment Account To Cash $2,000 $2,000 (Being incidental expenses incurred) $1,150 January 01 Equipment Account To cash $1,150 (Being insurance expense incurred)

Straight Line method 2 Yearly Residual Cost Years Depreciation $28,350 value $89,050 $4,000 Depreciation Accumulated Net Book Value Depreciation $28,350 $56,700 $85,050 Year Expense $28,350 $60,700 $32,350 $4,000 1 $28,350 2 $28,350 3 Double declining balance method Opening Yearly Depreciation $59,367 Year Rate Balance $89,050 66.67% Year 1 $29,683 66.67% $19,789 Year 2 $9,894 Year 3 66.67% $5,894 Year 3 Depreciation will equal to Net book value minus scrap value Double Declining method working number of years useful life Depreciation rate of assets (1/number of years) 33.33% Double Declining depreciation rate 66.67% Depreciation Expense $59,367 Accumulated Net Book Depreciation $59,367 $79,156 $85,050 Year Value $29,683 $9,894 $4,000 1 $19,789 2 $5,894 3 Units of Production Method 4 Residual Cost Total Hours Rate value $89,050 $4,000 $3.09 27,500 Yearly Year Rate X Hours Depreciation $26,907 $25,051 $3.09 Year 1 8,700 $3.09 Year 2 8,100 $3.09 $28,762 Year 3 9,300 Accumulated Depreciation Net Book Depreciation $26,907 $51,958 $80,720 Value Year Expense $62,143 $37,092 $8,330 $26,907 1 $25,051 2. $28,762

General Journal Debit Credit Date $28,350 December Depreciation Year 2 $28,350 To Accumulated Depreciation (Being Depreciation recorded for year 2) General Journal Debit Credit Date December Bank Account Year 2 $26,000 Accumulated Depreciation Loss on Sale of Equipment To Equipment Account (Being sale of Equipment recorded) $56,700 $6,350 $89,050 Loss on sale of Equipment Original cost of Equipment Less: Accumulated Depreciation Net Book value Sale value Loss on sale of Equipment $89,050 $56,700 $32,350 $26,000 $6,350