Hello, I require section b to be completed. Problem 9-7A (Part Level Submission)
ID: 2552476 • Letter: H
Question
Hello, I require section b to be completed.
Problem 9-7A (Part Level Submission) Yukon Productions Corp. purchased equipment on March 1, 2015, for $72,000. The company estimated the equipment would have a useful life of three years and produce 12,000 units, with a residual value of $8,100. During 2015, the equipment produced 4,900 units. On November 30, 2016, the machine was sold for $19,000 and had produced 5,700 units that year. (a) Your answer is correct. Record all the necessary entries for the years ended December 31, 2015 and 2016, using the following depreciation methods: (Credit account tities are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round the depreciation rate in the single diminishing-balance method to 2 decimal places, eg. 0.33% and Round depreciation per unit in the units-of-production depreciation method to 2 decimal places, eg. 2.25 and final answers to o decimal places, e.g. 5,275.) (1) Straight-line Debit Credit Date Account Titles and Explanation 2015 Mar. 1Equipment 72000 Cash 72000 Dec. 31 TDepreciation Expense 17750 Accumulated Depreciat 17750 2016 Nov. 30 [Depreciation Expense 19525 Accumulated Depreciat 19525 (To record depreciation expense) Nov. 30 TCash 19000 Accumulated Depreciation 37275Explanation / Answer
b) 1) Straight Line
2015 Depreciation = [Cost - Residual Value)/useful life]*10/12
= [($72,000 - $8,100)/3 yrs]*10/12 = $17,750
2016 Depreciation upto date of sale = $21,300*11/12 = $19,525
Total Depreciation Expense for two years = $17,750+$19,525 = $37,275
Loss on Disposal = Cost - Total Depreciation - Sale Price
= $72,000 - $37,275 - $19,000 = $15,725
Net Expense for two years = Total Dep. Exp.+Loss on Disposal
= $37,275+$15,725 = $53,000
2) Diminishing Balance Method
Depreciation rate = 1/3 or 33.33%
2015 Depreciation = Cost*Depreciation Rate
= $72,000*1/3*10/12 = $20,000
2016 Depreciation = (Cost - Dep. 2015)*Dep. Rate
= ($72,000 - $20,000)*1/3*11/12 = $15,889
Total Depreciation Expense for two years = $20,000+$15,889 = $35,889
Loss on Disposal = Cost - Total Depreciation - Sale Price
= $72,000 - $35,889 - $19,000 = $17,111
Net Expense for two years = Total Dep. Exp.+Loss on Disposal
= $35,889+$17,111 = $53,000
c) Units of Production
Depreciation per unit = (Cost - Residual Value)/Total units produced over life
= ($72,000 - $8,100)/12,000 units = $5.325
2015 Depreciation = Units produced in 2015*Depreciation per unit
= 4,900 units*$5.325 = $26,092.50
2016 Depreciation = Units produced in 2016*Depreciation per unit
= 5,700 units*$5.325 = $30,352.50
Total Depreciation Expense for two years = $26,092.50+$30,352.50 = $56,445
Gain on Disposal = Sale Price+Total Depreciation-Cost
= $19,000+$56,445-$72,000 = $3,445
Net Expense for two years = Total Dep. Exp.-Gain on Disposal
= $56,445-$3,445 = $53,000
Schedule showing each method of depreciation (Amounts in $)
Straight-Line Diminishing-Balance Units-of-Production Depreciation Expense 2015 17,750 20,000 26,093 2016 19,525 15,889 30,352 Total Depreciation Expense for two years 37,275 35,889 56,445 Add/(Less): Loss/(gain) on disposal 15,725 17,111 (3,445) Net expense for two years 53,000 53,000 53,000Related Questions
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