Question

Stan's Lumber Mill sold two pieces of equipment in 2017. The following information pertains to the...

Stan's Lumber Mill sold two pieces of equipment in 2017. The following information pertains to the two pieces of equipment:
Purchase Useful Salvage Depreciation Sales
Cost    Date    Life    Value    Method    Date Sold    Price   
#1 $86,000 7/1/13 5 yrs.    $6,000 Straight-line    7/1/17 $20,000
#2 $95,000 1/1/16 5 yrs.    $5,000 Double-declining 12/31/17 $37,000
   -balance

Instructions
(a) Compute the depreciation on each piece of equipment from the purchase date to the date of disposal (make a schedule - showing each year & each piece of equipment separately)
(b) Prepare the journal entries in 2017 to record 2017 depreciation and the sale of each piece of equipment.

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Homework Answers

Answer #1

a)

1.Straight Line Method of Depreciation=(Cost of machine-Salvage value)/Useful Life

=(86000-6000)/5

=16000

2.Double Declining Method=(Depreciation under Straught Line Method/Cost-salvage Value)*2*100

=(18000/90000)*2*100

=40%

b)

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