On July 1, Hartford Construction purchases a bulldozer for $228,000. The equipme
ID: 2568685 • Letter: O
Question
On July 1, Hartford Construction purchases a bulldozer for $228,000. The equipment has a 9-year life with a residual value of $16,000. Hartford uses the units-of-output method of depreciation, and the bulldozer is expected to yield 26,500 operating hours.
Required:
Chart of accounts...
(a) Calculate the depreciation expense per hour of operation. (b) The bulldozer is operated 1,250 hours in the first year, 2,755 hours in the second year, and 1,225 hours in the third year of operations. Journalize the depreciation expense for each year.* Using 6 rowsChart of accounts...
ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Supplies 119 Prepaid Insurance 120 Land 121 Equipment 122 Accumulated Depreciation 132 Goodwill 133 Patents LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 313 Income Summary REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 520 Salaries Expense 521 Advertising Expense 522 Supplies Expense 523 Delivery Expense 524 Rent Expense 525 Insurance Expense 531 Repairs and Maintenance Expense 541 Depreciation Expense 544 Amortization Expense-Patents 591 Miscellaneous Expense 710 Interest ExpenseExplanation / Answer
Particulars
Purchase Value of the Bulldozer
228000
Less: Residual Value
16000
Depreciable Value
212000
Operating Hours
26500
Depreciation expense per hour of operation. (212000/26500)
8
Journalize the depreciation expense for each year.
Date
Accounts Title and Explanation
Debit
Credit
Year 1
Depreciation Expense
10000
Accumulated Depreciation
10000
(1250*8)
Date
Accounts Title and Explanation
Debit
Credit
Year 2
Depreciation Expense
22040
Accumulated Depreciation
22040
(2755*8)
Date
Accounts Title and Explanation
Debit
Credit
Year 3
Depreciation Expense
9800
Accumulated Depreciation
9800
(1225*8)
Particulars
Purchase Value of the Bulldozer
228000
Less: Residual Value
16000
Depreciable Value
212000
Operating Hours
26500
Depreciation expense per hour of operation. (212000/26500)
8
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