Question
please fill in the blanks and do the journal entries.
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Chart of Accounts Starting questions Journal Instructions New lithographic equipment, acquired at a cost of $859,200 on March 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $96,660. The manager requested information regarding the effect of alternatlve methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance methed 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 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 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 wording of account titles.
Explanation / Answer
a. straight line method:
Double declining balance method:
2. To record sale:
3.
Straight line method: Cost 859200 Salvage value 96660 Useful life 5 years Depreciation per year = (cost-salvage value)/ useful life = ( 859200-96660) /5 = 152508
