90.2K

Verified Solution

Link Copied!

• On 1/1/20X1, Illini acquires equipment for $100,000 with an expected life of 10 years and an expected residual value of $7,000. Illini also spends $10,000 customizing the equipment to increase its efficiency. Illini elects the double declining balance method to account for the equipment. The annual maintenance for the equipment routinely performed in December costs Illini $2,000 in 20X1.
• On 1/1/20X2, Illini decides that it is more appropriate to use the straight line method to account for the equipment. On 6/31/20X2, Illini sells the equipment for $80,000. Hint: ignore the maintenance that has not been performed for 20X2.

Project 1.4 Part 2 Balance Sheet

Date	Account Name		Debit	Credit
1/1/20X1	Equipment		[A]
		Cash		[B]
1/1/20X1 customization:	Equipment		[C]
		Cash		[D]
12/31/20X1	Depreciation expense		[E]
		Accumulated depreciation-Equipment		[F]
12/31/20X1	Maintenance expense		[G]
		Cash		[H]
6/31/20X2	Depreciation expense		[I]
		Accumulated depreciation-Equipment		[J]
6/31/20X2	Cash		[K]
	Accumulated depreciation-Equipment		[L]
	Loss		[M]
		Equipment		[N]

Answer & Explanation Solved by verified expert

See Answer