Opt_Prob_Solutions_chap_8_Solutions

Opt_Prob_Solutions_chap_8_Solutions - Chapter 8 Optional...

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Chapter 8 Optional Problem Solutions P8–3. Req. 1 Cost of each machine: Machine A B C Total Purchase price ..................................... $7,600 $25,600 $6,800 $40,000 Installation costs .................................. 300 500 200 1,000 Renovation costs ................................. 2,000 400 600 3,000 Total cost .......................................... $9,900 $26,500 $7,600 $44,000 Req. 2 Computation of depreciation at the end of year 1 for each machine: Machine Method Computation A Straight-line ($9,900 - $1,500) x 1/5 years = $1,680 B Units-of-production ($26,500 - $900) ÷ 20,000 hours = $1.28 $1.28 x 2,000 hours = $2,560 C Double-declining-balance ($7,600 - 0) x 2/4 years = $3,800 Adjusting entry: Depreciation expense ($1,680 + $2,560 + $3,800) (+E, - SE) 8,040 Accumulated depreciation, Machine A (+XA, - A) 1,680 Accumulated depreciation, Machine B (+XA, - A) 2,560 Accumulated depreciation, Machine C (+XA, - A) 3,800
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AP8–5. Req. 1 a. Machine A - Jan. 1, 2007: (1) Depreciation expense in 2007 - none recorded because disposal date was Jan. 1, 2007. (2) To record disposal: Cash (+A) ............................................................................ 5,750 Accumulated depreciation, machine A ( - XA, +A) ............... 17,600 Loss on disposal of machine (+Loss, - SE) ......................... 650 Machine A ( - A) ............................................................. 24,000 b. Machine B - December 31, 2007: (1) To record depreciation expense for 2007: Depreciation expense (+E,
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