Purdue Company purchased equipment on April 1, 2012 for $270,000 cash. The equipment was expected to have a useful life of 3 years or 18,000 operating hours and a residual value of $9,000. The equipment was used for 7,500 hours during 2012, 5,500 in 2013, 4,000 hours in 2014 and 1,000 hours in 2015.

i) Prepare the journal entries to record the purchase of the equipment on April 1, 2012

ii) Determine the depreciation expense for the years ended December 31, 2012, 2013, 2014 and 2015 by

(a) The straight-line method, (b) the unit-of-production method & (c) the double-declining method

iii) Prepare the balance sheet extract for 2012, 2013, and 201

Answer rating: 100% (QA)

Solution Cost of machine purchased in cash 270000 Residual value 9000 Us full life 3 Year or 18000 operating hour i Journal Entry Date 1st April 2012 ... View the full answer