New lithographic equipment, acquired at a cost of $772,800 on March 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $86,940. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected. In the first week of the fifth year, on March 4, the equipment was sold for $130,585. Required: 1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by (a) the straight-line method and (b) the double-declining-balance method. Round your answers to the nearest whole dollar. 2. Journalize the entry to record the sale assuming the manager chose the double-declining-balance method. Refer to the Chart of Accounts for exact wording of account titles. 3. Journalize the entry to record the sale in (2), assuming that the equipment was sold for $87,105 instead of $130,585. Refer to the Chart of Accounts for exact wording of account titles.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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New lithographic equipment, acquired at a cost of $772,800 on March 1 at the beginning of a fiscal year, has an estimated useful life of five years and an
estimated residual value of $86,940. The manager requested information regarding the effect of alternative methods on the amount of depreciation
expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected.
In the first week of the fifth year, on March 4, the equipment was sold for $130,585.
Required:
1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each
year, and the book value of the equipment at the end of each year by (a) the straight-line method and (b) the double-declining-balance
method. Round your answers to the nearest whole dollar.
2. Journalize the entry to record the sale assuming the manager chose the double-declining-balance method. Refer to the Chart of Accounts for
exact wording of account titles.
3. Journalize the entry to record the sale in (2), assuming that the equipment was sold for $87,105 instead of $130,585. Refer to the Chart of
Accounts for exact wording of account titles.
Transcribed Image Text:New lithographic equipment, acquired at a cost of $772,800 on March 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $86,940. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected. In the first week of the fifth year, on March 4, the equipment was sold for $130,585. Required: 1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by (a) the straight-line method and (b) the double-declining-balance method. Round your answers to the nearest whole dollar. 2. Journalize the entry to record the sale assuming the manager chose the double-declining-balance method. Refer to the Chart of Accounts for exact wording of account titles. 3. Journalize the entry to record the sale in (2), assuming that the equipment was sold for $87,105 instead of $130,585. Refer to the Chart of Accounts for exact wording of account titles.
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