ook at a cost of 859200 on March 1 at the beginning of a fis

ook at a cost of $859,200 on March 1 at the beginning of a fiscal year, has an estimated useful life of five st of $859, New lithographic equipment, acquired at a on March 1 at years and an estimated residual value of $96,660. The manager requested information regarding the effect of alternative amount of depreciation expense each year.On the basis of the data presented to the manager, the double decdlining-belance method was selected in the first week of the fifth year, on March 4, the equipment was sold for $141,422 Required: 1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the and of each year, and the book vaue 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 dolar 2. Jornalizo the entry to record the sale assuming the manager chose the double-decining balance method 3. Journalize the entry to record the sale in (2), assuming that the equipment was sold for $96,962 instead of $141,422 Refer to the Chart of Accounts for exact wordling of account tities. Feec Check My Work All work saved. 18

Solution

1. Straight line

Year Depreciation expense Accumulated Depreciation,end of year Book value , end of year

1 [859200-96660]/5= 152508 152508 859200 - 152508 = 706692

2 [859200-96660]/5= 152508 152508 706692- 152508 = 554184 3   [859200-96660]/5= 152508 152508 554184- 152508 =401676   

4      [859200-96660]/5= 152508 152508 401676- 152508 =249168

5      [859200-96660]/5= 152508 152508 249168- 152508 = 96660      

Double declining

Year Depreciation expense Accumulated Depreciation,end of year Book value , end of year

   1 859200*40%= 343680 343680 859200 -343680 =515520

2 515520*0.4 = 206208 549888 515520 - 206208 = 309312

3   309312 * 0.4 = 123725 673613 309312 - 123725 = 185587

4 185587*0.4 = 74235 747848 185587 - 74235 = 111352

5    14692 762540 111352 - 14692 = 96660

Note:-   Straight line depreciation rate = 1 / 5 years * 100 = 20%

   Double declining rate = 2* 20% = 40%

     

2.

3.

Cash	141422
Accumlated depreciation-equipment	747848
To equipment		859200
To gain on sale		30070