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Problem 3 A machine that cost $ 26,000 had an estimated salvage value of $ 2,000...

Problem 3 A machine that cost $ 26,000 had an estimated salvage value of $ 2,000 and an estimated life of 4 years. The firm used double-declining balance for two years and then sold the machine for $ 8,300. Prepare the journal entry for the disposition of the machine.

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Answer #1

straight line rate of depreciation

1/4

25%

double declining rate of depreciation

25*2

50%

Year

cost of machine

depreciation rate

annual depreciation

balance at year

1

26000

0.5

13000

13000

2

13000

0.5

6500

6500

Accumulated depreciation

19500

Book value of machine

6500

date

explanation

debit

credit

cash

8300

accumulated depreciation

19500

machine

26000

gain on sale of machine

1800
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