Hi, I have a question,

1. A high-speed multiple-bit drill press costing $960,000 has an estimated salvage value of $80,000 and a life of ten years was purchased on April 20 of the current year. What is the annual depreciation for each of the first two years under the following depreciation methods?

1. Double-declining-balance method:

a. Year one, $______________.

b. Year two, $______________.

2. Units of production (activity) method (lifetime output is estimated at 110,000 units; the press produced 12,000 units in year one and 18,000 in year two):

a. Year one, $______________.

b. Year two, $______________.

3. Straight-line depreciation method:

a. Year one, $______________.

b. Year two, $______________.

1. On July 1, 2015, Griffey Corporation purchased Johnson Company by paying $287,500 cash and issuing a $75,000 note payable to Steve Johnson. At July 1, 2015, the balance sheet of Johnson Company was as follows.

Cash $ 37,500 Accounts payable $150,000

Receivables 67,500 Mortgage Payable 225,000

Office Supplies 3,500 Common Stock 125,000

Inventory 75,000 Treasury Stock (2,500)

Land 135,000 Retained Earnings 35,300

Buildings 156,250 Total Liabilities and Equity $532,800

Accum. Depr Bld (36,500)

Equipment 152,500

Accum. Depr Equip (65,450)

Copyrights 7,500

Total Assets $532,800

The recorded amounts all approximate current (market and book) values except for land (worth $145,000), inventory (worth $93,750), and copyrights (worth $11,250).

Hint: Accumulated depreciation does not carry forward subtract from related asset to obtain book value.

Instructions

Prepare the July 1 entry for Griffey Corporation to record the purchase.