On January 1, 2011, the Pine River Paper Company purchased ...

[Diane]

On January 1, 2011, the Pine River Paper Company purchased manufacturing equipment for 80,000. The equipment has a 4-year estimated useful life and a salvage value of 5,000. The company expects to use the equipment for 300,000 hours.
 
  Actual hours the equipment was used are provided in the table below:
 
  Year Hours
  2011 100,000
  2012 80,000
  2013 50,000
  2014 70,000
 
  Required:
  Calculate the depreciation expense for each year of the asset's life using:
  1. the straight-line method,
  2. the double-declining balance method, and
  3. the activity (units of production) method.

Question 2

In preparing a bank reconciliation, the amount indicated by a credit memo for a note receivable collected by thebank is added to the balance per company's records.
 a. True
  b. False
 
   Indicate whether the statement is true or false

[Chocorrol77]

Answer to Question 1

1. Straight-line method
Year Depreciation expense
2011 18,750 = (80,000  5,000) / 4 years
2012 18,750
2013 18,750
2014 18,750

2. Double-declining method
Year Depreciation expense
2011 40,000 = (2/4) x 80,000
2012 20,000 = (2/4) x 40,000
2013 10,000 = (2/4) x 20,000
2014  5,000 = (2/4) x 10,000

3. Activity (units of production) method
(80,000  5,000) / 300,000 hours = 0.25 per hour
Year Depreciation Expense
2011 25,000 = 100,000 hours  0.25
2012 20,000 = 80,000 hours  0.25
2013 12,500 = 50,000 hours  0.25
2014 17,500 = 70,000 hours  0.25

Answer to Question 2

True

[Diane]

YES! Correct, THANKS for helping me on my review

[nanny]

Gracias!