On January 1, Year 1 the Sunshine Company acquired a new machine at a cost of $2
ID: 2498431 • Letter: O
Question
On January 1, Year 1 the Sunshine Company acquired a new machine at a cost of $270,000. The new machine has an estimated life of five years, with a $22,000 salvage value. The company uses the double declining method to record their depreciation.
a. Create a double declining worksheet, with the following headings Year, Beginning Book Value, Depreciation Rate, Annual Depreciation, Accumulated Depreciation, and Ending Book Value.
b. Using your worksheet, prepare the monthly journal entry for March Year 4.
Explanation / Answer
a. Double Declining Depreciation Worksheet (All values in $) Year Beginning Book Depreciation Annual Accumulated Ending Value Rate Depreciation Depreciation Book Value 1 248000 40% 99200 99200 148800 2 148800 40% 59520 158720 89280 3 89280 40% 35712 194432 53568 4 53568 40% 21427.2 215859.2 32140.8 5 32140.8 40% 12856.32 228715.52 19284.48 b. The monthly journal entry for March Year 4 is Depreciation A/c DR $ 21,427.20 To Accumulated Depreciation A/c $ 21,427.20