Question

Exercise 8-9A Computing and recording straight-line versus double-declining-balance depreciation LO 8-2, 8-3 [The following information applies to the questions displayed below.] At the beginning of Year 1, Copland Drugstore purchased a new computer system for 85,000. It is expected to have a five-year life and a $15,000 salvage value. Exercise 8-9A Part c c. Prepare the journal entries to recognize depreciation for each of the five years, assuming that the company uses (1) Straight-line depreciation. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) (2) Double-declining-balance depreciation. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Copland drugstore
SLM method journal entries
Year 1	Computer	85000
	Cash		85000
Dec.31,Year 1	Dep. Exp. ( 85000 - 15000 ) / 5	14000
	Accumulated dep.		14000
Dec.31,Year 2	Dep. Exp. ( 85000 - 15000 ) / 5	14000
	Accumulated dep.		14000
Dec.31,Year 3	Dep. Exp. ( 85000 - 15000 ) / 5	14000
	Accumulated dep.		14000
Dec.31,Year 4	Dep. Exp. ( 85000 - 15000 ) / 5	14000
	Accumulated dep.		14000
Dec.31,Year 5	Dep. Exp. ( 85000 - 15000 ) / 5	14000
	Accumulated dep.		14000
DDB method journal entries
Year 1	Computer	85000
	Cash		85000
Dec.31,Year 1	Dep. Exp. ( 85000 * 40% )	34000
	Accumulated dep.		34000
Dec.31,Year 2	Dep. Exp. ( 85000 - 34000 ) * 40%	20400
	Accumulated dep.		20400
Dec.31,Year 3	Dep. Exp. ( 85000 - 34000 -20400 ) * 40%	12240
	Accumulated dep.		12240
Dec.31,Year 4	Dep. Exp.	1680
	Accumulated dep.		1680
Dec.31,Year 5	Dep. Exp.	1680
	Accumulated dep.		1680