What is journal entry that would record this transaction

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Reference no: EM1376809

Q Spoiled Baby Corp sells baby buggies and has started an equipment replacement project. You are needed to evaluate the Book Value of each of its fixed assets and make decisions regarding the purchases, disposition of various assets and trades.

Show your recommendation and justify your position for each of the subsequent events.

1. SPC purchased a tube extruder on 3^rd April, 2007 for $27,000. It has a useful life of 10 years and a residual value of $4,000. SPC used double declining balance depreciation for this asset. On 19^th February, 2012 SPC has an offer to sell this unit for 8,000.

2. SPC purchased a winding machine on 28^th July, 2012 for $21,000. It has a useful life of 6 years or 12,000 hours. It has a residual value of $3,000. SPC is unsure whether to use straight line depreciation or units of production. It anticipates using equipment just about 3000 hours each year.

3. SPC purchased a funneling machine on 9^th February, 2009 for $72,000. It has a useful life of 5 years and a residual value of $12,000. SPC has used Straight line depreciation for this gear. SPC has evaluated that this equipment no longer meets its needs and has decided to exchange this unit for a new model. The new Model has a MSRP of $100,000. On 28^th December, 2012 SPC will exchange its equipment for new Model and pay $77,000.

4. SPC has a fully piece of equipment that is presently fully depreciated on its books. This equipment is no longer used and SPC wants to get rid of it. The cost of equipment is $10,000. The company has been presented $300 for its parts. Find what is journal entry that would record this transaction?

Reference no: EM1376809

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