146.On January 1, 2013, Juniper Manufacturing Company purchased equipment for $106,000. Juniper paid $2,000 to have the machine installed. The equipment is expected to have a 5 year useful life and a...

146.On January 1, 2013, Juniper Manufacturing Company purchased equipment for $106,000. Juniper paid $2,000 to have the machine installed. The equipment is expected to have a 5 year useful life and a salvage value of $13,000.


Required:


a) At what dollar amount should this equipment be recorded in Juniper's accounting records?
b) Compute depreciation expense for 2013 and 2014 using straight line depreciation.
c) What is the book value at the beginning of 2015?
d) Assume the equipment was sold on January 1, 2015, for $85,000. Compute the amount of gain or loss from the sale.
e) Prepare the journal entry to record the sale of the equipment using the information in part d).

147.On January 1, 2013, Goldberg Company purchased a new computer system for $60,000. Management estimates that the system will have a 5-year life and a salvage value of $5,000. Joan Goldberg, the company president, knows that the system can be depreciated using either the straight-line method or the double-declining method. She is concerned as to the possible effect on various financial statement analyses if the company uses one method versus the other.


Required:


a) In 2013 which method will have the larger negative effect (in other words, the less favorable effect) on each of the following ratios:
Debt to equity ratio
Return on sales (net income/sales)
b) In 2016 which method will have the larger negative effect on each of the following ratios
Debt to equity ratio
Return on sales