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 $102.000. It also paid $6,000 for freight on the equipment, $3,300 to prepare the equipment for use in the warehouse, and $1,800 for insurance to cover the equipment during operation in Year 1 The equipment was estimated to have a residual value of $5,300 and be used over three years or 34,000 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 10,000 hours in Year 1: 9,400 hours in Year 2: and 10.600 hours in Year 3. 5. On December 31 of Year 2 before the year-end adjustments, the equipment was sold for $32.500. Record the sale of the equipment assuming the company used the straight-line method Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5

Answer 1

PART 1
Date	Particulars	Debit	Credit
1-Jan	Equipment	$      111,300.00
	Prepaid insurance	$          1,800.00
	Cash		$                              113,100.00

Part 2		SLM =(Cost-residual value)/useful life		35333.33333
	Year	Depreciation expense		Accumulated Depreciation	Net book value
	1	35,333	35333.33333	35,333	75,967
	2	35,333	35333.33333	70,667	40,633
	3	35,333	35333.33333	106,000	5,300

Part 3
	Under double declining method rate is determined	Rate=(1/useul life)*2	0.666666667	67%
Year	Depreciation expense		Accumulated Depreciation	Net book value
1	74,200	74571	74,200	37,100
2	24,857	24857	99,057	12,243
3	6942.81	6942.81	106,000	5,300

1260 adjusted because residual value should be 5300 at the end of third year

PART 4
Year	Depreciation expense	Accumulated Depreciation	Net book value
1	$                     35,333.33	$                                 35,333.33	$                 75,966.67
2	$                     33,213.33	$                                 68,546.67	$                 42,753.33
3	$                     37,453.33	$                              106,000.00	$                   5,300.00

PART 5

Date	Particulars	Debit	Credit
31-Dec	Depreciation Expense	35,333
	Accumulated Depreciation		35,333
31-Dec	Cash	$                     32,500.00
	Accumulated Depreciation	70,667
	Loss on disposal of equipment	8,133
	Equipment		111,300