BUSS 1203 NAL EXAM, December 201s FI (20 points) On January 1 $30,000 Company pu

Question

BUSS 1203 NAL EXAM, December 201s FI (20 points) On January 1 $30,000 Company purchased equipment for $180,000. The asset was 4 years 2009, Pumba Compary peah useful f this Part A: 1. Prepare a schedule showing deprehe straight life of the asset, are a schedule showing depreciation for the depdmin that the company used the straight line method of assu depreciation. Depreciation Accumulated Net Book expense Date cost depreciation Value Dec 31,2009 Dec 31.2010 Dec 31, 2011 Dec 31. 2012 2 Prepare the journal entry to record depreciation for the first year only male try to ecord depreciation forthe firstyearonly epare ther Assume that the depreciation was recorded up to December 31, 201 If the asset was sold afterwards on December 31, 2011 for $70,000, 3. prepare the journal entry to record this asset sale Part B: 1. Prepare a schedule showing depreciation for the life of the asset assuming that the company used the double declining balance method of depreciation. Depreciation Accumulated Net Book ion Value, E Date Net Book Value, Beg expense Dec 31,2009 Dec 31, 2010 Dec 31, 2011 Dec 31, 2012

Explanation / Answer

Answer: Part A:

1. Calculation of dep expense=(180000-30000)/4 years=$37500

2. Depreciation expense A/C Dr. $37500

         To Accumulated dep A/C                       $37500

3. Cash A/C Dr. $70000

    Accumulated dep A/c Dr. $112500

          To machinery A/C                             $180000

            To gain on sale of machinery A/C        $2500

Part B:

1. Calculation of dep expense=(180000-30000)/4 years=$37500*2=$75000

2. Depreciation expense A/C Dr. $75000

         To Accumulated dep A/C                       $75000

3. Cash A/C Dr. $70000

    Accumulated dep A/c Dr. $131250

          To machinery A/C                             $180000

            To gain on sale of machinery A/C        $21250

Date Cost Dep expense Accumulated dep Net book value Dec 31,2009 180000 37500 37500 142500 Dec 31,2010 142500 37500 75000 105000 Dec,31 2011 105000 37500 112500 67500 Dec 31,2012 67500 37500 150000 30000

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