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Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 79.3C
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Can I have help solving this problem I keep getting it wrong.
![Depreciation by Two Methods; Sale of Fixed Asset
New tire retreading equipment, acquired at a cost of $656,250 on September 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $56,400. The manager requested information regarding the effect of alternative methods on the amount of
depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected.
In the first week of the fifth year, on September 6, the equipment was sold for $96,100.
Required:
1. Determine the annual depreciation expense for each of the estimated four 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 the following methods:
a. Straight-line method
Depreciation
Accumulated Depreciation,
Book Value,
Year
Expense
End of Year
End of Year
1
$ 119,9' v
$
$
2
$ 119,9' V
$
X
3
$ 119,9' V
$
4
$ 119,9' v
$4
$
5
$ 119,9' V
b. Double-declining-balance method
Depreciation
Accumulated Depreciation,
Book Value,
Year
Expense
End of Year
End of Year
1
$4
$4
$
2
$
$
$
X
3
$
4
$4
$
$
5
$4
$
$
X
X
2. Journalize the entry to record the sale, assuming double-declining-balance method is used. If an amount box does not require an entry, leave it blank.
Cash v
Accumulated Depreciation-Equipment
Loss on Sale of Equipment x
Gain on Sale of Equipment
3. Journalize the entry to record the sale in (2), assuming that the equipment was sold for $82,500 instead of $96,100. If an amount box does not require an entry, leave it blank.
Cash v
Depreciation Expense-Equipment x
Gain on Sale of Equipment x](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2bc5a380-d206-422e-b06a-a081f2747573%2Fbbf2a970-72f3-426d-bdaf-fcd62f3439ce%2F95y972_processed.png&w=3840&q=75)
Transcribed Image Text:Depreciation by Two Methods; Sale of Fixed Asset
New tire retreading equipment, acquired at a cost of $656,250 on September 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $56,400. The manager requested information regarding the effect of alternative methods on the amount of
depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected.
In the first week of the fifth year, on September 6, the equipment was sold for $96,100.
Required:
1. Determine the annual depreciation expense for each of the estimated four 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 the following methods:
a. Straight-line method
Depreciation
Accumulated Depreciation,
Book Value,
Year
Expense
End of Year
End of Year
1
$ 119,9' v
$
$
2
$ 119,9' V
$
X
3
$ 119,9' V
$
4
$ 119,9' v
$4
$
5
$ 119,9' V
b. Double-declining-balance method
Depreciation
Accumulated Depreciation,
Book Value,
Year
Expense
End of Year
End of Year
1
$4
$4
$
2
$
$
$
X
3
$
4
$4
$
$
5
$4
$
$
X
X
2. Journalize the entry to record the sale, assuming double-declining-balance method is used. If an amount box does not require an entry, leave it blank.
Cash v
Accumulated Depreciation-Equipment
Loss on Sale of Equipment x
Gain on Sale of Equipment
3. Journalize the entry to record the sale in (2), assuming that the equipment was sold for $82,500 instead of $96,100. If an amount box does not require an entry, leave it blank.
Cash v
Depreciation Expense-Equipment x
Gain on Sale of Equipment x
Expert Solution
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Step 1
Step 1
Depreciation is the written down in the value of the assets.
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