Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. a new machine costs $120,000, has an estimated use

A new machine costs $120,000, has an estimated useful life of five years and an estimated...

Free

60.1K

Verified Solution

Question

Accounting

A new machine costs $120,000, has an estimated usefullife of five years and an estimated salvage value of $15,000 at theend of that time. It is expected that the machine can produce210,000 widgets during its useful life.

The New Times Company purchases this machine on January1, 2017, and uses it for exactly three years. During these yearsthe annual production of widgets has been 80,000, 50,000, and30,000 units, respectively. On January 1, 2020, the machine is soldfor $45,000.

Required:

  1. Straight-line
  2. Units-of-production
  3. Double-declining-balance

2.         Preparethe proper journal entry for the sale of the machine under thethree different depreciation methods.

Answer & Explanation Solved by verified expert
4.2 Ratings (720 Votes)

Calculate depreciation expense :

Depreciation rate = (120000-15000)/210000 = 0.50 per unit

2017 2018 2019
Straight line (120000-15000/5) = 21000 21000 21000
Units of production 0.50*80000 = $40000 0.5*50000 = 25000 0.50*30000 = 15000
Double declining balance 120000*40% = 48000 120000*60%*40% = 28800 120000*60%*60%*40% = 17280

Journal entry on Sale:

Straight line

Date account and explanation debit credit
Jan 1,2020 Cash 45000
Accumulated depreciation-Machine 63000
Loss on sale of machine 12000
Machine 120000
(To record sale of machine)

Units of production

Date account and explanation debit credit
Jan 1,2020 Cash 45000
Accumulated depreciation-Machine 80000
Gain on sale of machine 5000
Machine 120000
(To record sale of machine)

Double decline balance

Date account and explanation debit credit
Jan 1,2020 Cash 45000
Accumulated depreciation-Machine 94080
Gain on sale of machine 19080
Machine 120000
(To record sale of machine)

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Physics
1.2K views

Prove that Maxwell’s equations yield the wave equation for the electric field [HINT: ∇ × (∇×...

Psychology
1.2K views

Discussion Question: Recall three on-the-job incidents in which you had difficulty listening effectively. For each incident, describe...

Advance Math
1.2K views

Answer the following: 145 mod 20 712 mod 17 Determine whether the following pair of numbers are relatively prime....

Accounting
1.2K views

Have recent tax law changes increased or decreased the double tax on C corporation income? Explain.

Physics
1.2K views

A uniform solid sphere is rolling without slipping along a horizontal surface with a speed...

Physics
1.2K views

3 88 A smooth sphere of radius R is made to translate in a straight...

Geometry
1.2K views

5 An isosceles right triangle whose legs measure is continuously rotated about one of its...

Accounting
1.2K views

The average price of a gallon of gas in 2015 dropped $0.94 (28 percent) from...

Accounting
1.2K views

Example 3: John wants to take dinner in a restaurant and finds out that they...

Accounting
1.2K views

What is the Codification? A. The method by which accounting standards developed over time B....

Finance
1.2K views

Value a call option in the Black-Scholes world: strike price = 50; stock price =...

Finance
1.2K views

undefined Question 9 1 pts The following are recent prices of Hawthorne Corporation common...