3.Pegasus Company purchased equipment on January 1, 2007, at a cost of $128,000. The equipment is expected to have a useful life of five years or 100,000 units and have a residual value of $8,000. During 2007, the equipment produced 25,000 units.
Required:
Determine the depreciation expense for 2007 under the a) straight-line, b) double declining balance, and c) units-of-production methods.
4.Carver Company purchased machinery on January 1, 2007 at a cost of $200,000. The machinery has an estimated useful life of five years and a $20,000 residual value. Carver uses the straight-line depreciation method. On December 31, 2008 Carver sold the machinery for $80,000. Prepare the December 31, 2008 transaction in the accounting system.
Account ASSETS= LIABILITIES + OWNER’S EQUITY