Company purchased a machine at a cost of $80,000. The machine is expected to hav

Question

Company purchased a machine at a cost of $80,000. The machine is expected to have a $5,000 salvage value at the end of its 5-year useful life Instructions Compute annual depreciation for the first and second years using the (a) straight-line method. (b) double-declining-balance method. Brown Company purchased equipment in 2008 for $150,000 and estimated a $10,000 salvage value at the end of the equipment's 10-year useful life. At December 31, 2014, there was $98,000 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2015, the equipment was sold for $40.000. Prepare all necessary journal entries related to the equipment in the books of Brown Company on March 31, 2015.

Explanation / Answer

P-8 Ermler Company Details Amt $ Machine Cost           80,000 Salvage               5,000 Depreciable value           75,000 Useful life                     5 SL rate 20% DD balance rate   40% SL depreciation details Sl rate Book Value Depreciation Year 1           80,000           16,000 Year 2           64,000           16,000 DDB Depreciation DDB rate Book Value Depreciation Year 1           80,000           32,000 Year 2           48,000           19,200 P-9. Brown Company Machine cost        150,000 Salvage             10,000 Depreciable Value        140,000 Useful life                     10 years SL depreciation per year           14,000 SL depreciation per month= $   1,166.67 SL depreciation for 3 months $   3,500.00 Accumulated depreciation 31.12.2014.           98,000 Additional deprecition till Mar 31.2015.             3,500 Total Accumulated depreciation till Mar 31.2015.        101,500 Accounting Entry Date Account Title Dr $ Cr $ 31.3.2015 Equipment          150,000 Accumulated Depreciation        101,500 Cash           40,000 Loss on Sale of Asset               8,500 Pr 2 Bond Par value        800,000 Coupon rate 6% Issue price        735,110 Effective interest rate 8% Bond dicount=           64,890 Amortizaton schedule Interest payable Interest Expense Amortization of interest expense Unamortized Expense Carrying Value of Bond Jan 1 2015.               64,890             735,110 Jun 30.2015.           24,000           29,404                   5,404               59,486             740,514 Dec 31.2015.           24,000           29,621                   5,621               53,865             746,135 Accounting Entries Date Account Title Dr $ Cr $ Jan 1.2015. Cash        735,110 Bond Payable        735,110 Discount on Bond           64,890 Jun 30.2015. Interest Payable           24,000 Interest Expense           29,404 Discount on Bond             5,404 Cash           24,000 Interest Payable           24,000 Dec 31.2015. Interest Payable           24,000 Interest Expense           29,621 Discount on Bond             5,621 Cash           24,000 Interest Payable           24,000 prob 4 Preference shares outstanding        200,000 Par value per pref share                   20 Total Par value       4,000,000 Preference share @5% per year        200,000 a When pref share not cumulative ,   Total dividend in 2015        800,000 preference hare payable in 2015 dividend        200,000 Dividend for common stock          600,000 b when pref dividend cumulative ; Preference dividend for 2013        200,000 Preference dividend for 2014        200,000 Preference dividend for 2015        200,000 Total Cumulative preference dividend          600,000 Total dividend in 2015        800,000 Dividend for common stock          200,000

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