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On January 1, 2015, Charmin Manufacturing Company purchased a machine for $220,000. The company expects...

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Question

Accounting

On January 1, 2015, Charmin Manufacturing Company purchased a machine for $220,000. The company expects to use the machine a total of 80,000 hours over the next 10 years. The estimated sales price of the machine at the end of 10 years is $10,000. The company used the machine 8,000 hours in 2015 and 12,000 in 2016.

Requirements:

1. Compute and show workings for the deprecation expense to be charged using the straight line, units of production and double-declining methods of deprecation for 2015 and 2016. (Round off answers to the nearest dollar where applicable)

2. Compute the net book value for 2015 and 2016 if the company adopted the double declining method of deprecation.

Question B

Based on the above information, assume that Charmin Manufacturing company adopted the straight-line method and sold the machine for $180,000 on July 1st, 2017.

Requirements:

1. Prepare a statement showing the computation of the gain or loss on the disposal of the machine.

2. Prepare a compound journal entry to record the disposal of the fixed asset as at July 1st, 2017. (Round off answer to the nearest dollar).

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