50.1K

Verified Solution

Link Copied!

1.

Equipment was acquired at the beginning of the year at a cost of $78,660. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,920.

Required:

a.	What was the depreciation expense for the first year?
b.	Assuming the equipment was sold at the end of the second year for $59,486, determine the gain or loss on sale of the equipment.
c.	Journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles.

---------

2.

Depreciation by Three Methods; Partial Years

Perdue Company purchased equipment on April 1 for $62,640. The equipment was expected to have a useful life of three years, or 4,860 operating hours, and a residual value of $1,890. The equipment was used for 900 hours during Year 1, 1,700 hours in Year 2, 1,500 hours in Year 3, and 760 hours in Year 4.

Required:

Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method.

Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.

a. Straight-line method

Year	Amount
Year 1	$
Year 2	$
Year 3	$
Year 4	$

b. Units-of-activity method

Year	Amount
Year 1	$
Year 2	$
Year 3	$
Year 4	$

c. Double-declining-balance method

Year	Amount
Year 1	$
Year 2	$
Year 3	$
Year 4	$

-------

3.

The following were selected from among the transactions completed by Babcock Company during November of the current year. Babcock uses the net method under a perpetual inventory system.

Nov.	3	Purchased merchandise on account from Moonlight Co., list price $89,000, trade discount 30%, terms FOB destination, 2/10, n/30.
	4	Sold merchandise for cash, $38,210. The cost of the goods sold was $20,810.
	5	Purchased merchandise on account from Papoose Creek Co., $51,550, terms FOB shipping point, 2/10, n/30, with prepaid freight of $730 added to the invoice.
	6	Returned $14,000 ($20,000 list price less trade discount of 30%) of merchandise purchased on November 3 from Moonlight Co.
	8	Sold merchandise on account to Quinn Co., $15,010 with terms n/15. The cost of the goods sold was $10,190.
	13	Paid Moonlight Co. on account for purchase of November 3, less return of November 6.
	14	Sold merchandise on VISA, $231,570. The cost of the goods sold was $142,060.
	15	Paid Papoose Creek Co. on account for purchase of November 5.
	23	Received cash on account from sale of November 8 to Quinn Co.
	24	Sold merchandise on account to Rabel Co., $54,800, terms 1/10, n/30. The cost of the goods sold was $33,850.
	28	Paid VISA service fee of $3,580.
	30	Paid Quinn Co. a cash refund of $6,420 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,140.

Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.

Answer & Explanation Solved by verified expert

See Answer