Question 5 (20 marks) years, Founder Medical Services purchased a new piece of medical equipment at the
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Question 5 (20 marks) years, Founder Medical Services purchased a new piece of medical equipment at the beginning of the fiscal year, on July 1, 2019, with a list price of $140,000. The company pays freight cost on the equipment in the amount of $6,000. The company also paid $500 for insurance (on the equipment while in transit) and installation and testing in the amount of $1,500. The equipment has an estimated useful life of 8 total estimated machine hours of 180,000 hours and a salvage value of $8,000. The machine actual hours of use was 22,500 for the fiscal year ended June 2020, 18,000 hours for the fiscal year ended June 2021, and 31,500 hours for the fiscal year ended June 2022. The Company uses the unit of activity method for depreciating the machinery. The company sold the medical equipment on July 1, 2022, for $100,000, with $75,000 received in cash at the time of sale, and the balance in a 6-months Note Payable. Required: a. b. C. Determine the depreciation expense for each of the first three (3) fiscal years of the Company, following the purchase of the machinery AND the accumulated depreciation balance at the end of (9 marks) these three (3) fiscal years. Prepare the journal entry(ies) at July 1, 2022, to record the sale of the medical equipment. (5 marks) Assume that the company had used the straight-line method of depreciation, determine the depreciation expense for each of the three (3) fiscal years of the company, following the purchase of the machinery AND the accumulated depreciation balance at the end of these three (3) fiscal (6 marks) years.
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