Question

Problem 9-7A a-b Sandhill Productions Corp. purchased equipment on March 1, 2012, for $60,000. The company estimated the equipment would have a useful life of three years and produce 12,000 units, with a residual value of $9,000. During 2018, the equipment produced 4,900 units. On November 30, 2019, the machine was sold for $17,000 and had produced 5,600 units that year. Record all the necessary entries for the years ended December 31, 2018 and 2019, using the following depreciation methods: (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round the depreciation rate in the double-diminishing-balance method to the nearest whole percent, e.g. 43% and round depreciation per unit in the units-of-production depreciation method to 2 decimal places, e.g. 2.25 and final answers to O decimal places, e.g. 5,275.) (1) Straight-line Debit Credit Date Account Titles and Explanation 2018 Mar. 1 Dec. 31 2019 Nov. 30 (To record depreciation expense) Nov. 30 (To record the sale of machine) (2) Double-diminishing-balance Debit Credit Date Account Titles and Explanation 2018 Mar. 1 Dec. 31

Answer 1

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Sandhill
Equipment Cost	60,000.00	A
Residual Value	9,000.00	B
Depreciable Value	51,000.00	C=A-B		Journal Entries
				Date	Account	Debit $	Credit $
Straight Line Method				3/1/2018	Equipment	60,000.00
Depreciable Value	51,000.00	See C			Bank		60,000.00
Life	3.00	D			(being equipment purchased)
Annual depreciation	17,000.00	E=C/D
				12/31/2018	Depreciation Expense	14,166.67
Depreciation for 2018	14,166.67	F=E/12*10			Accumulated Depreciation		14,166.67
(Mar to Dec= 10 months)
Depreciation for 2019	15,583.33	G=E/12*11		11/30/2019	Depreciation Expense	15,583.33
(Jan to Nov= 11 months)					Accumulated Depreciation		15,583.33
Total Depreciation	29,750.00	H=F+G		11/30/2019	Bank	17,000.00
Book value on 30 Nov 19	30,250.00	I=A-H			Accumulated Depreciation	29,750.00
Sale value	17,000.00	J			Loss on sales	13,250.00
Loss on sales	13,250.00	K=I-J			Equipment		60,000.00
Units of Production Method				Journal Entries
Depreciable Value	51,000.00	See C		Date	Account	Debit $	Credit $
Life (Units)	12,000.00	L		3/1/2018	Equipment	600,000.00
Depreciation per unit	4.25	M=C/L			Bank		600,000.00
					(being equipment purchased)
	Production	Depreciation
Year 2018	4,900.00	20,825.00		12/31/2018	Depreciation Expense	20,825.00
Year 2019	5,600.00	23,800.00			Accumulated Depreciation		20,825.00
Total		44,625.00	N
Book value on 30 Nov 19		15,375.00	O=A-N	11/30/2019	Depreciation Expense	23,800.00
Sale value		17,000.00	J		Accumulated Depreciation		23,800.00
Gain on sales		1,625.00	P=J-O
				11/30/2019	Bank	17,000.00
					Accumulated Depreciation	44,625.00
					Equipment		60,000.00
					Gain on sales		(1,625.00)
Double Declining Method				Journal Entries
Total cost of Truck	60,000.00		A	Date	Account	Debit $	Credit $
Life	3.00		D	3/1/2018	Equipment	600,000.00
Annual depreciation	20,000.00		Q=A/D		Bank		600,000.00
Depreciation	33.33%		R=Q/A		(being equipment purchased)
Double Depreciation %	67.00%		S=2*R
Depreciation for 2018	26,800.00		T=A*S*10/12	12/31/2018	Depreciation Expense	26,800.00
(Mar to Dec= 10 months)					Accumulated Depreciation		26,800.00
Book Value- 2018	33,200.00		U=A-T
Depreciation for 2019	20,390.33		V=U*S*11/12	11/30/2019	Depreciation Expense	20,390.33
(Jan to Nov= 11 months)					Accumulated Depreciation		20,390.33
Total Depreciation	47,190.33		W=T+V
Book value on 30 Nov 19	12,809.67		X=A-W	11/30/2019	Bank	17,000.00
Sale value	17,000.00		J		Accumulated Depreciation	47,190.33
Gain on sales	4,190.33		Y=J-X		Equipment		60,000.00
					Gain on sales		4,190.33

Table	Straight Line Method	Double Declining Method	Units of Production Method
Depreciation expense
2018	14,166.67	26,800.00	20,825.00
2019	15,583.33	20,390.33	23,800.00
Total for 2 years	29,750.00	47,190.33	44,625.00
Loss (gain) on disposal	13,250.00	(4,190.33)	(1,625.00)
Net expense for 2 years	43,000.00	43,000.00	43,000.00