Reference no: EM132901797

Question - Pool Corporation, Inc., is the world's largest wholesale distributor of swimming pool supplies and equipment. Assume Pool Corporation purchased for cash new loading equipment for the warehouse on January 1 of Year 1, at an invoice price of $72,000. It also paid $2,000 for freight on the equipment, $1,300 to prepare the equipment for use in the warehouse, and $800 for insurance to cover the equipment during operation in Year 1. The equipment was estimated to have a residual value of $3,300 and be used over three years or 24,000 hours.

Required -

1. Record the purchase of the equipment, freight, preparation costs, and insurance on January 1 of Year 1.

2. Record the depreciation schedule assuming Pool Corporation uses the straight-line method.

3. Record the depreciation schedule assuming Pool Corporation uses the double-declining-balance method.

4. Record the depreciation schedule assuming Pool Corporation uses the units-of-production method, with actual production of 8,000 hours in Year 1; 7,400 hours in Year 2; and 8,600 hours in Year 3.

5. On December 31 of Year 2 before the year-end adjustments, the equipment was sold for $22,500. Record the sale of the equipment assuming the company used the straight-line method.