Problem -
On July 1, 2014 Calloway Inc. acquired a new machine at a cost of $40,000 with a residual value of $4,000. The estimated useful life is 6 years and 200,000 units. For the year ending June 30, 2015 the machine produced 35,000 units. For the year ending June 30, 2016, the machine produced 40,000 units.
1. Using the three depreciation methods (straight line, units of production, and double decline balancing) calculate the depreciation for the year ending 6/30/15 and present each of the three journal entries in proper form.
2. On July 1, 2017 the machine is sold for $20,000. Complete the journal entry in proper form based on your calculations under each of the three depreciation methods (see item 1 in this problem). You will present three separate, independent journal entries.