Questions -
Q1. Pryce Company owns equipment that cost $65,000 when purchased on January 1, 2016. It has been depreciated using the straight-line method based on an estimated salvage value of $5,000 and an estimated useful life of 5 years.
Prepare Pryce Company's journal entries to record the sale of the equipment in these four independent situations.
(a) Sold for $31,000 on January 1, 2019.
(b) Sold for $31,000 on May 1, 2019.
(c) Sold for $11,000 on January 1, 2019.
(d) Sold for $11,000 on October 1, 2019.
Q2. Rottino Company purchased a new machine on October 1, 2019, at a cost of $150,000. The company estimated that the machine will have a salvage value of $12,000. The machine is expected to be used for 10,000 working hours during its 5-year life.
Compute the depreciation expense under straight-line method for 2019.
Compute the depreciation expense under units-of-activity for 2019, assuming machine usage was 1,700 hours.
Compute the depreciation expense under declining-balance using double the straight-line rate for 2019 and 2020.