Reference no: EM132203807
1. On December 31stthe company identified that 100 units of inventory which were part of a product line with decreased market value had an original cost of $800 each but a fair market value now of $400 each.
2. Purchased new equipment for $50,000 by paying cash on Oct 1. This equipment will have an 8 year useful life, an estimated residual value of 8,000 and will be depreciated using the straight line depreciation method. Record the purchase transaction and the depreciation expense on Dec 31 of first year.
3. Purchased $4,000 of equipment on July1, paying $500 in cash and owing the rest on accounts payable to the supplier. The equipment will be depreciated using the double declining balance method have a useful life of 4 years. It is estimated to have a 500 residual value.
Required:
Record the purchase transaction and the depreciation expense on Dec 31 of first year.
4. The Company sold equipment for $18,000 which was classified as an asset on June 30. For simplification, this equipment was put into service on the same day (June 30) eight years ago. The asset's life was originally estimated to be 10 years. The original cost was $50,000 with an estimated residual value of $5,000. The asset was being depreciated using the straight-line method.
Required:
Record all related transactions related to the sale.