26.3X Harvey DaCosta, a sole trader, purchases on1 November 2015 a new machine for $18,000.His business year end is 31 October but he cannotdecide which method of depreciation he should usein respect of the machine - the straight line methodor the reducing balance method.Required:In order to assist him in making his decision,draw up the machine account, and provision fordepreciation account, for the three years from1 November 2015, using:(a) the straight line method(b) the reducing balance method.Each account must indicate which method is beingused and must be balanced at the end of each of thethree years.Notes:li) In both cases the rate of depreciation is to be10%.lii) Calculations should be made to the nearest $.

Depreciation means reducing the value of the tangible fixed assets. It is mandatory to every…

Answered: 26.3X Harvey DaCosta, a sole trader,…

26.3X Harvey DaCosta, a sole trader, purchases on 1 November 2015 a new machine for $18,000. His business year end is 31 October but he cannot decide which method of depreciation he should use

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter4: Income Measurement And Accrual Accounting

Section: Chapter Questions

Problem 4.8E: Depreciation On July 1, 2016, Dexter Corp. buys a computer system for $260,000 in cash. Assume that...

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Depreciation On July 1, 2016, Dexter Corp. buys a computer system for $260,000 in cash. Assume that the computer is expected to have a four-year life and an estimated salvage value of $20,000 at the end of that time. Required Prepare the journal entry to record the purchase of the computer on July 1, 2016. Compute the depreciable cost of the computer. Using the straight-line method, compute the monthly depreciation. Prepare the adjusting entry to record depreciation at the end of July 2016. Compute the computers carrying value that will be shown on Dexters balance sheet prepared on December 31, 2016.
Q4: Onslow Co. purchases a used machine for $178,000 cash on January 2 and readies it for use the next day at a $2,840 cost. On January 3, it is installed on a required operating platform costing $1,160, and it is further readied for operations. The company predicts the machine will be used for six years and have a $14,000 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of. Required Prepare journal entries to record the machine’s purchase and the costs to ready and install it. Cash is paid for all costs incurred. Prepare journal entries to record depreciation of the machine at December 31 of (a) its first year in operations and (b) the year of its disposal. Prepare journal entries to record the machine’s disposal under each of the following separate assumptions: (a) it is sold for $15,000 cash; (b) it is sold for $50,000 cash; and (c) it is destroyed in a fire and the…
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Question 1 On January 1, 2017 Baker purchased a new stamping machine for its plant. This new piece of equipment cost $120,000 and was recorded in Baker's accounting system with a $120,000 debit to the Equipment account and a $120,000 credit to the Cash account. Baker estimates that the stamping machine will last 5 years and will have no value at the end of those 5 years. At the end of January, February, March, April, and May, Baker made the correct depreciation adjusting entries. Select the June 30, 2017 adjusting entry Baker should make for June’s depreciation: (A) Accumulated depreciation: 2,000 ________ depreciation: expense _______ 2,000 (B) depreciation expense 12,000 _______ accumulated depreciation: ______ 12,000 (C) depreciation expense 2,000 ______ accumulated depreciation ______ 2,000 (D) depreciation espense 24,000 ________ cash _______ 2,000 loss of…
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