Question

Question 2. Write your answer in the space provided or on a separate sheet of paper. (20 points) a) The cost of an asset is $10,000,000, and its residual value is $100,000. Estimated useful life of the asset is four years. Prepare the schedule of depreciation using the double-declining-balance method of accounting. b) On January 1, 2016, WAX-D purchased equipment for $60,000 cash, expecting it to remain in service for six years. The equipment is depreciated using the straight-line method with $2,000 estimated residual value. On April 30, 2018, the equipment was sold for $48,000 cash. Record depreciation expense for 2018 and the sale of the equipment on April 30, 2018. (Do not round your intermediate calculations.) c) On October 1, 2017, Zircon Jewelry Company accepted a 4-month, 10% note for $2,400 in settlement of an overdue account receivable. Interest revenue was accrued through December 31, 2017. Zircon receives the maturity value of the note at maturity. Prepare the journal entry to record the collection.

Answer 1

a) Straight-line depreciation rate = 100%/4 years = 25%

Double-declining depreciation rate = 2 x 25% = 50%

Schedule of Depreciation - Double-declining Method
Year	Book Value Beginning of Year	x	Depreciation Rate	=	Annual Depreciation	End of Year
						Accumulated Depreciation	Book Value
1	10000000		50%		5000000	5000000	5000000
2	5000000		50%		2500000	7500000	2500000
3	2500000		50%		1250000	8750000	1250000
4	1250000				1150000	9900000	100000

Per HOMEWORKLIB RULES, the first question has been answered. Please post each of the remaining independent questions separately. Thank you.