Question

Crane Productions Corp. purchased equipment on March 1, 2018, for $ 63,000. The company estimated the equipment would have a useful life of three years and produce 12,000 units, with a residual value of $ 8,400. During 2018, the equipment produced 4,900 units. On November 30, 2019, the machine was sold for $ 20,000 and had produced 5,700 units that year.

Record all the necessary entries for the years ended December 31, 2018 and 2019, using the following depreciation methods: (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round the depreciation rate in the double-diminishing-balance method to the nearest whole percent, e.g. 43% and round depreciation per unit in the units-of-production depreciation method to 2 decimal places, e.g. 2.25 and final answers to 0 decimal places, e.g. 5,275.)

A) Straight-Line

Date 2018	Account Titles and Explanation	Debit	Credit
Mar. 1
Dec. 31
2019
Nov. 30
	To record Depreciation Expense
Nov. 30
	To Record the Sale of Machine

B) Double-Diminishing-Balance

Date 2018	Account Titles and Explanation	Debit	Credit
Mar. 1
Dec. 31
2019
Nov. 30
	To record Depreciation Expense
Nov. 30
	To Record the Sale of Machine

C) Units of Production

Date 2018	Account Titles and Explanation	Debit	Credit
Mar. 1
Dec. 31
2019
Nov. 30
	To record Depreciation Expense
Nov. 30
	To Record the Sale of Machine

Answer 1

Straight-line depreciation
Cost of assets			63,000
Salvage value			(8,400)
Depreciable cost			54,600
Divided: useful life in Years			3
Depreciation expense per year			18,200
Depreciation expense per year 2018 (18200*10/12)			15,167
Depreciation expense per year 2019 (18200*11/12)			16,683
Accumulated Depreciation on Nov 2019			31,850
Cost of assets			63,000
Accumulated Depreciation on Nov 2019			31,850
Book value			31,150
Machine sold			20,000
Loss (Gain) on sale of assets			11,150
Date	Account Titles and Explanation	Debit	Credit
Mar 1, 2018	Equipment	63,000
	Cash		63,000
	(To record Purchase of Equipment.)
Dec 31, 2018	Depreciation expense - equipment	15,167
	Accumulated Depreciation - equipment		15,167
	(To record Depreciation Expense.)
Nov 30, 2019	Depreciation expense - equipment	16,683
	Accumulated Depreciation - equipment		16,683
	(To record Depreciation Expense.)
Nov 30, 2019	Accumulated Depreciation - equipment	31,850
	Cash	20,000
	Loss on sale of equipment	11,150
	Equipment		63,000
	(To Record the Sale of Machine.)

Double-Diminishing-Balance
Depreciation rate as per Double-Diminishing-Balance (1/3 year =33.33) (33.33%*2=66.67% = 67% rounded)
Cost of assets			63,000
Depreciation expense per year 2018 (63000*67%*(10/12))			35,175
Book value at end of 2018			27,825
Depreciation expense per year 2019 (27825*67%*(11/12))			17,089
Book value at end of Nov 2019			10,736
Book value			10,736
Machine sold			20,000
Loss (Gain) on sale of assets			(9,264)
Date	Account Titles and Explanation	Debit	Credit
Mar 1, 2018	Equipment	63,000
	Cash		63,000
	(To record Purchase of Equipment.)
Dec 31, 2018	Depreciation expense - equipment	35,175
	Accumulated Depreciation - equipment		35,175
	(To record Depreciation Expense.)
Nov 30, 2019	Depreciation expense - equipment	17,089
	Accumulated Depreciation - equipment		17,089
	(To record Depreciation Expense.)
Nov 30, 2019	Accumulated Depreciation - equipment	52,264
	Cash	20,000
	Gain on sale of equipment		9,264
	Equipment		63,000
	(To Record the Sale of Machine.)

Units-of-production
Cost of assets			63,000
Salvage value			(8,400)
Depreciable cost			54,600
Divided: useful life in units			12,000
Depreciation expense per unit			4.55
Depreciation expense per year 2018 (4900*4.55)			22,295
Depreciation expense per year 2019 (5700*4.55)			25,935
Accumulated Depreciation on Nov 2019			48,230
Cost of assets			63,000
Accumulated Depreciation on Nov 2019			48,230
Book value			14,770
Machine sold			20,000
Loss (Gain) on sale of assets			(5,230)
Date	Account Titles and Explanation	Debit	Credit
Mar 1, 2018	Equipment	63,000
	Cash		63,000
	(To record Purchase of Equipment.)
Dec 31, 2018	Depreciation expense - equipment	22,295
	Accumulated Depreciation - equipment		22,295
	(To record Depreciation Expense.)
Nov 30, 2019	Depreciation expense - equipment	25,935
	Accumulated Depreciation - equipment		25,935
	(To record Depreciation Expense.)
Nov 30, 2019	Accumulated Depreciation - equipment	48,230
	Cash	20,000
	Gain on sale of equipment		5,230
	Equipment		63,000
	(To Record the Sale of Machine.)