Question

Problem 9-7A a-b Sandhill Productions Corp. purchased equipment on March 1, 2018, 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. Your answer is partially correct. Try again. 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 0 decimal places, e.g. 5,275.)

Answer 1

Given Data Asset purchased for Useful life Estimated capacity Residual value 60,000 3 Years 12000 units $ 9.000 30-Nov-19 Asset sold on Units of production method -[(Cost - Residual value)/ (Estimated capacity)]* Units produced Depreciation for 2018 [(60000-9000)/12000]*4900 (51000/12000)*4900 $ 4.25 4900 $ 20,825 $ 4.25 5600 Depreciation for 2019 $ 23,800

Double decling method - [(Cost - Residual value)/ (Useful life)] Straight line Depreciation for 2018 [(60000)/3] 20000 =20000/60000 Depreciation rate 33.33% -Straight line depreciation rate *2 Double decling method rate =33.33%* 2 66.67% Depreciation under Double decling method Straight line depreciation rate *2*Opening book value -60000*66.67% 40,000 Depreciation for 10 months (2018) - 40000*10/12 33,333 Opening book value 26,667 Depreciation for 11 months Nov 2019 $ 16,296

Units of production 2018 Accounts tittle Double decling method 2018 Accounts tittle Debit Credit Debit Credit Equipment Cash $ Equipment $60,000 60,000 $60,000 $60,000 Cash Depreciation expense Accumulated depreciation Depreciation expense Accumulated depreciation $ $20,825 33,333 $33,333 $20,825 2019 Depreciation expense Accumulated depreciation 2019 Depreciation expense Accumulated depreciation $23,800 16,296 $16,296 $23,800 Cash Cash $ 17,000 $17,000 Accumulated depreciation $ |Equipment Gain on sale of equipment Accumulated depreciation$44,625 Equipment Gain on sale of equipment 49,630 $60,000 $60,000 $ 6,630 1,625