Question

New lithographic equipment, acquired at a cost of $905,600 on March 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $101,880. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected.

In the first week of the fifth year, on March 4, the equipment was sold for $149,286.

	Required:
1.	Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by (a) the straight-line method and (b) the double-declining-balance method. Round your answers to the nearest whole dollar.
2.	Journalize the entry to record the sale assuming the manager chose the double-declining-balance method. Refer to the Chart of Accounts for exact wording of account titles.
3.	Journalize the entry to record the sale in (2), assuming that the equipment was sold for $103,386 instead of $149,286. Refer to the Chart of Accounts for exact wording of account titles.

Starting Questions

Shaded cells have feedback.

Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by (a) the straight-line method and (b) the double-declining-balance method. Round your answers to the nearest whole dollar. Enter all amounts as a positive numbers.

a. Straight-line method

		Accumulated Depreciation,
Year	Depreciation Expense	End of Year	Book Value, End of Year
1
2
3
4
5

Points:

12 / 15

b. Double-declining-balance method

		Accumulated Depreciation,
Year	Depreciation Expense	End of Year	Book Value, End of Year
1
2
3
4
5

Points:

6 / 15

Feedback

Check My Work

Journal

Shaded cells have feedback.

2. On March 4, journalize the entry to record the sale assuming the manager chose the double-declining-balance method. Refer to the Chart of Accounts for exact wording of account titles.

How does grading work?

PAGE 1

JOURNAL

ACCOUNTING EQUATION

Score: 33/49

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1	✔			✔
2		✔				✔
3
4		✔			✔	✔

Points:

6.06 / 9

3. On March 4, journalize the entry to record the sale in (2), assuming that the equipment was sold for $103,386 instead of $149,286. Refer to the Chart of Accounts for exact wording of account titles.

How does grading work?

PAGE 1

JOURNAL

ACCOUNTING EQUATION

Score: 32/49

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1	✔	✔		✔		✔
2						✔
3
4		✔			✔	✔

Please answer in the format I have provided above.

Thank you so much

Answer 1

1
a	Straight-line rate
	Years	Depreciation Expense	Accumulated Depreciation	Book Value, End of Year
	1	$160,744	$160,744	$744,856
	2	$160,744	$321,488	$584,112
	3	$160,744	$482,232	$423,368
	4	$160,744	$642,976	$262,624
	5	$160,744	$803,720	$101,880
	Depreciation per year = ($905,600 - $101,880)/5
b	Double declining balance method
	Years	Depreciation Expense	Accumulated Depreciation	Book Value, End of Year
	1	$362,240	$362,240	$543,360
	2	$217,344	$579,584	$326,016
	3	$130,406	$709,990	$195,610
	4	$78,244	$788,234	$117,366
	5	$15,486	$803,720	$101,880
				ASSETS	LIABILITIES	EQUITY
2	Cash	$149,286		$149,286
	Accumulated Depreciation - Equipment	$788,234		$788,234
	Equipment		$905,600	-$905,600
	Gain on Sale of Equipment		$31,920			$31,920
3	Cash	$103,386		$103,386
	Accumulated Depreciation - Equipment	$788,234		$788,234
	Loss on Sale of Equipment	$13,980				-$13,980
	Equipment		$905,600	-$905,600