Homework Session 15 Spring 2010

# Homework Session 15 Spring 2010 - P83. Req. 1 Cost of each...

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P8–3. Req. 1 Cost of each machine: Machine A B C Total Purchase price. .................................... \$8,000 \$25,000 \$6,000 \$39,000 Installation costs. ................................. 500 1,000 500 2,000 Renovation costs. ................................ 2,500 1,000 1,500 5,000 Total cost. ......................................... \$11,000 \$27,000 \$8,000 \$46,000 Req. 2 Computation of depreciation at the end of year 1 for each machine: Machine Method Computation A Straight-line (\$11,000 - \$1,000) x 1/5 years = \$2,000 B Units-of-production (\$27,000 - \$2,000) ÷ 50,000 hours = \$0.50 \$0.50 x 4,800 hours = \$2,400 C Double-declining-balance (\$8,000 - 0) x 2/4 years = \$4,000 Adjusting entry: Depreciation expense (\$2,000 + \$2,400 + \$4,000) (+E, - SE) 8,400 Accumulated depreciation, Machine A (+XA, - A) 2,000 Accumulated depreciation, Machine B (+XA, - A) 2,400 Accumulated depreciation, Machine C (+XA, - A) 4,000

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P8–6. Req. 1 a. Machine A - Sold on Jan. 1, 2011 (1) Depreciation expense in 2011 - none recorded because disposal date was Jan. 1, 2011. (2) To record disposal: Cash (+A). ........................................................................... 9,200 Accumulated depreciation, Machine A ( - XA, +A). .............. 13,500 Equipment (Machine A) ( - A). ....................................... 21,000 Gain on disposal of machine (+Gain, +SE). ................ 1,700 b. Machine B – Sold on December 31, 2011: (1) To record depreciation expense for 2011: Depreciation expense (+E, - SE). ........................................ 3,700 Accumulated depreciation, Machine B (+XA, - A). ....... 3,700 (\$41,000 – \$4,000) ÷ 10 years = \$3,700. (2) To record disposal: Cash (+A). ........................................................................... 3,500 Note receivable (+A). .......................................................... 4,000 Accumulated depreciation, Machine B (\$29,600 + \$3,700) ( - XA, +A) . ............................................................................ 33,300
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## This note was uploaded on 04/25/2010 for the course HADM 1121 taught by Professor Dittman during the Spring '07 term at Cornell University (Engineering School).

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Homework Session 15 Spring 2010 - P83. Req. 1 Cost of each...

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