Problem 9-7A a-b Sandhill Productions Corp. purchased equipment on March 1, 2018
ID: 2578779 • Letter: P
Question
Problem 9-7A a-b
Sandhill Productions Corp. purchased equipment on March 1, 2018, for $60,000. The company estimated the equipment would have a useful life of three years and produce 12,000 units, with a residual value of $8,600. During 2018, the equipment produced 4,900 units. On November 30, 2019, the machine was sold for $19,000 and had produced 5,600 units that year.
Date
Account Titles and Explanation
Debit
Credit
2018
Mar. 1
Dec. 31
2019
Nov. 30
(To record depreciation expense)
Nov. 30
Date
Account Titles and Explanation
Debit
Credit
2018
Mar. 1
Dec. 31
2019
Nov. 30
(To record depreciation expense)
Nov. 30
Date
Account Titles and Explanation
Debit
Credit
2018
Mar. 1
Dec. 31
2019
Nov. 30
(To record depreciation expense)
Nov. 30
SHOW LIST OF ACCOUNTS
Problem 9-7A a-b
Sandhill Productions Corp. purchased equipment on March 1, 2018, for $60,000. The company estimated the equipment would have a useful life of three years and produce 12,000 units, with a residual value of $8,600. During 2018, the equipment produced 4,900 units. On November 30, 2019, the machine was sold for $19,000 and had produced 5,600 units that year.
Explanation / Answer
Straight-line depreciation Date Account Titles and Explanation Debit Credit 2018 Mar. 1 Equipment 60000 Cash 60000 St.line depn.amt.=(60000-8600)/3= 17133 Dec. 31 Depreciation expense-Equipment(17133/12*10mths.) 14278 Accumualted depreciation-Equipment 14278 2019 Nov. 30 Depreciation expense-Equipment(17133/12*11mths.) 15705 Accumualted depreciation-Equipment 15705 (To record depreciation expense) Nov. 30 Cash 19000 Accumualted depreciation-Equipment(14278+15705) 29983 Loss on sale(Bal.Fig.) 11017 Equipment 60000 (To record the sale of machine) (2) Double-diminishing-balance Date Account Titles and Explanation Debit Credit 2018 Mar. 1 Equipment 60000 Cash 60000 Depreciable base =Declining book value at beg.of yr. Depn amt.= 2* straight line rate St.line rate= (6000-8600)/3=17133; 17133/60000=28.56% So, DDB rate= 28.56%*2= 57.12% Dec. 31 Depreciation expense-Equipment(60000*57.12%/12*10 mths.) 28560 Accumualted depreciation-Equipment 28560 2019 Nov. 30 Depreciation expense-Equipment(60000-28560)*57.12%/12*11 mths.) 16462 Accumualted depreciation-Equipment 16462 (To record depreciation expense) Nov. 30 Cash 19000 Accumualted depreciation-Equipment(28560+16462) 45022 Equipment 60000 Gain on sale (Bal. Fig.) 4022 (To record the sale of machine) (3) Units-of-Production Date Account Titles and Explanation Debit Credit 2018 Mar. 1 Equipment 60000 Cash 60000 Depreciable base of the equipment= 60000-8600= 51400 Depn. Amt.=(60000-8600)/12000= 4.28 per unit produced Dec. 31 Depreciation expense-Equipment(4.28*4900*/12*10 mths.) 17477 Accumualted depreciation-Equipment 17477 2019 Nov. 30 Depreciation expense-Equipment(4.28*5600/12*11 mths.) 21971 Accumualted depreciation-Equipment 21971 (To record depreciation expense) Nov. 30 Cash 19000 Accumualted depreciation-Equipment(17477+21971) 39448 Loss On sale (bal.Fig. ) 1552 Equipment 60000 (To record the sale of machine) Straight- Double-Diminishing- Units-of- Line Balance Production Depreciation expense 2018 14278 28560 17477 2019 15705 16462 21971 Total depreciation expense for two years 29983 45022 39448 + Loss (or - gain) on disposal 11017 -4022 1552 = net expense for 2 years 41000 41000 41000
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