Requirement 1:
Date | Account title and explanation | Debit | Credit |
Jan 1 | Equipment | $113,100 | |
Cash [102,000+6,000+3,300+1,800] | $113,100 | ||
[To record purchase of equipment] |
Requirement 2:
Straight line:
i | ii | iii | iv = i - iii | |
Year | Cost |
Depreciation Expense |
Accumulated Depreciation |
Book value |
1 | $113,100 | $35,933 | $35,933 | $77,167 |
2 | $113,100 | $35,933 | $71,867 | $77,167 |
3 | $113,100 | $35,933 | $107,800 | $77,167 |
Depreciation expense = (Cost - Salvage value)/Estimated useful
life
=(113,100-5,300)/3
=$35,933.33
Requirement 3:
Double declining:
Straight line Depreciation rate = (35,933.33/113,100) x 100% = 31.77% (approx.)
Double declining rate = 31.77% x 2 = 63.54%
i | ii | iii = i x ii | iv | v = i - iii | |
Year |
Beginning Book value |
Rate |
Depreciation Expense |
Accumulated Depreciation |
Ending Book value |
1 | $113,100 | 63.54% | $71,864 | $71,864 | $41,236 |
2 | $41,236 | 63.54% | $26,202 | $98,065 | $15,035 |
3 | $15,035 | 63.54% | $9,735* | $107,800 | $5,300 |
*Adjusted to get residual value of $5,300
Requirement 4:
Units of production:
i | ii | iii | iv = i - iii | |
Year | Cost |
Depreciation Expense |
Accumulated Depreciation |
Ending Book value |
1 | $113,100 | $31,706 | $31,706 | $81,394 |
2 | $113,100 | $29,806 | $61,512 | $51,588 |
3 | $113,100 | $33,608 | $95,120 | $17,980 |
Calculation:
Year | Depreciation expense = {[Cost-salvage value]/Total production hours} x Actual hours | Depreciation |
1 | {[113,100-5,300]/34,000} x 10,000 | $31,706 |
2 | {[113,100-5,300]/34,000} x 9,400 | $29,806 |
3 | {[113,100-5,300]/34,000} x 10,600 | $33,608 |
Requirement 5:
Date | Account title and explanation | Debit | Credit |
Dec 31 | Cash | $32,500 | |
Accumulated depreciation-equipment | $71,867 | ||
Loss on sale of equipment | $8,733 | ||
Equipment | $113,100 | ||
[To record sale of equipment] |
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