InstructionsNew lithographic equipment, acquired at a cost of $800,000 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimatedresidual value of $90,000. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year.On March 4 of Year 5, the equipment was sold for $135,000.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.2. Journalize the entry to record the sale assuming that the manager chose the double-declining-balance method.3. Journalize the entry to record the sale in (2) assuming that the equipment was sold for $88,750 instead of $135,000.

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Asked Dec 24, 2019
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image  to question uploaded. I have been really having issues writing the journal entries 

Instructions
New lithographic equipment, acquired at a cost of $800,000 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated
residual value of $90,000. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year.
On March 4 of Year 5, the equipment was sold for $135,000.
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.
2. Journalize the entry to record the sale assuming that the manager chose the double-declining-balance method.
3. Journalize the entry to record the sale in (2) assuming that the equipment was sold for $88,750 instead of $135,000.
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Instructions New lithographic equipment, acquired at a cost of $800,000 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $90,000. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On March 4 of Year 5, the equipment was sold for $135,000. 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. 2. Journalize the entry to record the sale assuming that the manager chose the double-declining-balance method. 3. Journalize the entry to record the sale in (2) assuming that the equipment was sold for $88,750 instead of $135,000.

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Expert Answer

Step 1
  1. (a)

Determine the annual depreciation expense, accumulated depreciation, and the book value by straight-line method.

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Accumulated Book Depreciation Expense Year Depreciation, End of Year Value, End of Year S658,000 $516,000 $142,000 $284.000 $426.000 Year 1 $142,000 S142,000 Year 2 Year 3 $142,000 $374,000 $568,000 S142,000 $232,000 Year 4 $142,000 $710,000 $90,000 Year 5 Working note: (Cost of the asset -Residual value) Depreciati on = Estimated useful life of the asset $800,000 -$90,000 5 years $710.000 5 = $142.000 Notes: • Accumulated Depreciation for the current year is the sum total of the previous years' depreciation expense. • Book value is the difference between the cost of the asset and the accumulated depreciation.

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Step 2
  1. (b)

Determine the annual depreciation expense, accumulated depreciation, and the book value by double-declining-balance method.

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Accumulated Book Depreciation Expense Year Depreciation, Value, End End of Year of Year $420,000 $320.000 $320,000 $800,000x 5 Year 1 $512,000 $288.000 $192.000 $480,000 x- Year 2 $172,800 $627,200 $115,200 $288,000x Year 3 $103,680 $696,320 $69.120 $172,800x. 5 Year 4 Year 5 $13.680 S710,000 $90,000 Notes: Accumulated depreciation is the sum total of the previous years' depreciation expense. • Book value is the difference between the cost of the asset and the accumulated depreciation. The depreciation expense should not exceed the residual value of $90,000. Thus, it should be adjusted to make the book value of the equipment (cost less accumulated depreciation) equal to its residual value. Thus, the depreciation expense for Year 5 would be$13,680 ($103,680 - $90,000).

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Step 3

2.

Journalize the entry to record the sale under the double-de...

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Debit Post Credit Account Title and Explanation Date (S) (S) Ref March 4 Cash 135,000 Accumulated depreciation-Equipment Gain on Sale of Equipment 696,320 31,320 Equipment (To record the sale of equipment.) 800,000 Working note: Calculate the gain or (loss) on the sale of equipment. Calculate the gain (loss) on sale of equipment Amount Amount Details (S) (S) 135,000 Cash received on sale of equipment Less: Cost of the equipment Less: Accumulated Depreciation Book Value of the equipment Gain on sale of equipment 800,000 (696,320) (103,680) 31,320

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