21. On January 1, 2015, Sundry Corp. purchased equipment for $55,000. It was exp
ID: 2657059 • Letter: 2
Question
21. On January 1, 2015, Sundry Corp. purchased equipment for $55,000. It was expected to last 2015. The s yeirs, after which it will be sold for $3,000. The year-end is December 31,2015. The depreciation expense for 2015 using the straight-line (a) $5,850. method will be (b) $6,500. (c) $6,875 (d) $7.250 (e) None of the above Sundry Corp. purchased equipment for $55,000. It was expected to last for 900 hours during the year ended December 31, 2015. The 22. On January 1, 2015, 8 years, after which it will be sold for $3,000. It is expected to be used for a total machine hours, and was used depreciation expense for 2015 using the units-of-production (a) $5,850 method will be (b) $6,188. (c) $6,500 (d) $13,750. (e) None of the above. 23. On January 1, 2015, Sundry Corp. purchased equipment for 8 years, after which it will be sold for $3,000, The year-end The depreciation expense for 2015 using the double diminishing-balance (a) S 6,875 (b) $12.375. (c) $13,000. (d) $13,750. (e) None of the above. $55,000. It was expected to last is December 31,2015. method will be 24. On April 1, 2015, Sundry Corp. purchased equipment for $55,000. It was expected to last 8 years, after which it will be sold for $3,000. The company uses the double method. The balance on the Accumulated Depreciation account at year-end December 31 will be (a) $21,484.38. (b) $11,171.81. (c) $10,300.65. (d) $9,750.25. (e) None of the above 25. On December 31, 2015, Cee Corp. sells an asset that originally cost $300,000 for $75,000. The accumulated depreciation account has a balance of S depreciation of $15,000 had been recorded. The journal entry to recognize a gain or loss on 200,000 after the current year's disposal of the asset would be: Debit Credit $75,000 Loss on disposal $40,000 $300,000 (b) Cash Debit Credit $75,000 Loss on disposal Asset $10,000 S300,000 Debit Credit Cash 75000 200000
Explanation / Answer
21) b) $6,500
Depreciation under Straight Line Method
Depreciation = ( Cost - Salvage Value) / Useful Life
= ( $55,000 - $3,000) / 8
= $6,500
22) a) $5,850
Depreciation under Units of Production Method
= (( Cost - Residual Value) / Total Expected machine hours over useful life ) x Machine hours used
= ( ( $55,000 - $3,000) / 8,000 hours) x 900hours
= $5,850
23) d) $13,750
Straight line depreciation percentage = $6,500 / 52,000 = 12.5%
Double diminishing method
Depreciation for a period = 2 x straight-line depreciation percent x book value at the beginning of the period.
Depreciation = 2 x 12.5% x $55,000 = $13,750
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