Question

ment was acquired at the beginning of the year (VVS) at a cost of $75,000. The equip the straight-line method based on an estimated useful life of six years and an estima d useful life of six years and an estimated residual value of $7,500 What was the depreciation expense for the first year? (b) Assuming the equipment was sold at the end of the second year for $59.000. Assuming the equipment the gain or loss on sale of the equipment. gain or loss (circle) (c) What is the journal entry to record the sale? 52. Equipment purchased at the beginning of the fiscal year (1/1/18) for $360,000 is expected to have a useful life of years, or 14,000 operating hours, and a residual value of $10,000. Compute the depreciation for the first and second years of use by each of the following methods: (a) Straight-Line (b) Units-of-Activity (1,200 hours first year; 2,250 hours second year) (@) Double-declining-balance Depreciation Method Depreciation Expense Year 1 Depreciation Expense Year (a) Straight-Line (b) Units-of-Activity (see above) c) Double-Declining Balance

Answer 1

Solution

31 (a) The depriciation expense for the first year is (75000-7500)/6 = $11250

(b) Book value of the equipment after two years = 75000 -2x11250 = $52500

Equipment sold for $59000,

There will be a Gain of $ 6500.

(c) Cash account Dr. 59000

accumulated depriciation account Dr. 22500

To Gain on sale 6500

To Equipment account 75000

32. Depriciation method Depriciation Expense 1 year   Depriciation Expense 2 year

Straight Line $70000    $140000

Unit of activity $30000   $56250

Doube declining balance $140000 $84000

33. Total wage payment = $2,500 Allowance per exemption = $80. Woods has two exemptions and so the amount of allowance that will be claimed 160.

So the wage after exemption = 2500 -160 = $2340/ week

therefore his federal income tax withholding is 28% of (2340-1796) + $356.90 = $509.22

34. Gross pay for the week =$58000 + 40 x 40 + 1.5x40 x (60-40) = $60800

Gross pay for the week = $60800 - [(6%+1.5%) of 60800 + 614] = $55626