On Jan 1, 2016 Sandra Company purchases equipment at a cash price of $80,000. Related expenditures...

 

Transcribed Image Text:

On Jan 1, 2016 Sandra Company purchases equipment at a cash price of $80,000. Related expenditures are sales taxes $4,000, insurance during shipping $1000, Insurance for one year $2000, fuel for testing 500, installation and testing $2,000. Sandra Company estimates that the useful life of the machine is 10 years with a $7,500 residual value remaining at the end of that time period. Assume that the double declining method of depreciation is used. Instructions: 1. Journalize the purchase of equipment on January 1, 2016 2. Journalize entry in 31/12/2018: 3. Journalize entry in 31/12/2018 if the company sold the equipment for $40,000 4. Journalize entry in 31/12/2019 if the company exchange the equipment when its fair market value 35000 and paid 40,000 cash. On Jan 1, 2016 Sandra Company purchases equipment at a cash price of $80,000. Related expenditures are sales taxes $4,000, insurance during shipping $1000, Insurance for one year $2000, fuel for testing 500, installation and testing $2,000. Sandra Company estimates that the useful life of the machine is 10 years with a $7,500 residual value remaining at the end of that time period. Assume that the double declining method of depreciation is used. Instructions: 1. Journalize the purchase of equipment on January 1, 2016 2. Journalize entry in 31/12/2018: 3. Journalize entry in 31/12/2018 if the company sold the equipment for $40,000 4. Journalize entry in 31/12/2019 if the company exchange the equipment when its fair market value 35000 and paid 40,000 cash.

Answer rating: 100% (QA)

2 6 As per the accounting standards the acquisition cost of an equipment includes all the incidental ... View the full answer