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In: Accounting

Milan Clothing Co. bought a machine for $40,000 on January 1, 2020. The machine has a...

Milan Clothing Co. bought a machine for $40,000 on January 1, 2020. The machine has a useful life of 4 years, and a residual value of $3,000.

Part A Assume that Milan Clothing Co. uses the double-declining balance method for depreciation. Calculate depreciation expense for Year 1 and Year 2 of the machine’s useful life. Please show your calculations (i.e., each piece and the total).

Part B . Assume that this part is unrelated to Part A. That is, forget that you even did Part A.

Again, assume that Milan Clothing Co. bought a machine for $40,000 on January 1, 2020. The machine has a useful life of 4 years, and a residual value of $3,000.

Now, assume that Milan Clothing Co. uses the straight line method for depreciation. Milan Clothing Co. sold the machine on April 1, 2021 for $30,000. Record the journal entry that Milan Clothing Co. would record for the transaction of selling the machine. Please show and label your calculations (i.e., showing your logic and the pieces behind the amount in each account that is affected when you are recording this transaction).

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ekkarill92 answered 1 year ago
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