Part 2. (16 points)
Sparky’s year-end is December 315'. The facts are presented below about Sparky’s two long-lived assets: 3. On April 1, 2012, Sparky purchased Machine A for $60,825 for terms 3/10, n/30. Sparky paid for
the equipment on April 28‘“. Freight to the point where it was set up was $300, and it cost $700
to install it. During installation, it was accidentally damaged and Sparky incurred a cost of $800
to properly repair the new machine. Also, Sparky paid $3,000 to tear down and rebuild a wall to
install the machine in the factory. After installation, it cost $1,500 for trial runs. The machine’s
useful life was estimated at 10 years, with a salvage value of $7,000. Goldman uses double-
declining balance method of depreciation, Determine the book value of Machine A as of
December 31, 2013. Put your answer in the box. HC = 60,825 * .97 = 59k + 300 +700 +3k+1.5k $64,500 HC 2012 Depr Exp: 2/10 * (64,500 -0) * 9/12 = 9,675 2013 Depr Exp; 2/10 * (64,500 —9,675) = 10 965 20 640 AD ‘:|
43 860 BV On September 1, 2014, Sparky sold Machine A, accepting a two-year $46,000 face value non-
interest bearing Note requiring semi-annual payments of $11,500 for P&I beginning February 1,
2015. The buyers normal cost to borrow is 8%APR. Provide the journal entry to record the sale
of Machine A. Good journal entry format is required. PV of$1 @ 4%, 4n is .85 2014 Depr Exp: 2/10 * (43,860) * 8/12 =5,848 PV of$1 @ 8%, 2n is ,86 9/1/14 NR 46,000 PVOA @ 4%, 4n is 3.63 AD- Machine 26,488 PVOA @ 8%, 2n is 1.78 Gain Machine Sale 3,733
Discount on NR 4,255 Machine 64,500
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Posted 21 Apr 2017 03:04 AM
My Price 9.00
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