Mister Macchiato purchased a coffee drink machine on January? 1, 2016 for $ 38,0
ID: 2553829 • Letter: M
Question
Mister Macchiato purchased a coffee drink machine on January? 1, 2016 for $ 38,000. Expected useful life is 10 years or 50,000 drinks. In 2016?, 10,000 drinks were? sold, and in 2017, 20,000 drinks were sold. Residual value is $3,000.
b. Assume that Mister Macchiato sold the equipment for $23,000 cash on July? 1, 2018. Assume that management has depreciated the equipment by using the? double-declining-balance method. Record Mister Macchiato?'s depreciation for 2018 and the sale of the equipment on July? 1, 2018.
Explanation / Answer
Depreciation for the year upto sale =$2,432
Journal entries
Depreciation under DDB Method Year - a Net Book value, beginning of year - b Double declained depreciation - c = b/Life of assets*2 Accumulated depreciation Net book value, End of the year - d = b-c 2016 $ 38,000 $ 7,600 $ 7,600 $ 30,400 2017 $ 30,400 $ 6,080 $ 13,680 $ 24,320 2018 $ 24,320 $24,320/10*2*6/12 = $2,432 $ 16,112 $ 21,888