On January 1, 2016, Jefferson Manufacturing Company purchased equipment for $212,000. Jefferson paid $4,000 to have the machine installed. The equipment is expected to have a 5 year useful life and a salvage value of $26,000. The equipment is expected to produce 1,000,000 units over its useful life. In 2016, 150,000 units were produced. 225,000 were produced in 2017.
1. At what dollar amount should this equipment be recorded in Jefferson's accounting records?
2. Compute depreciation expense for 2016 and 2017 using Straight Line depreciation.
3. Compute depreciation expense for 2016 and 2017 using Double Declining Balance
4. Compute depreciation expense for 2016 and 2017 using Units of Production Using the figures for Straight Line depreciation: (#2)
5. What is the book value at the beginning of 2018?
6. Assume the equipment was sold on January 1, 2018, for $135,000. Compute the amount of gain or loss from the sale.
7. Prepare the journal entry to record the sale of the equipment using the information in 6.