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Golden Sales has bought $135,000 in fixed assets on January 1st associated with sales equipment. The residual value of these assets is estimated at $10,000 at the end of their 4-year service life. Golden Sales managers want to evaluate the options of depreciation.
(a) Compute the annual straight-line depreciation and provide the sample depreciation journal entry to be posted
at the end of each of the years.
(b) Write the journal entries for each year of the service life for these assets using the double-declining balance
method.
Conversion Costs
The sum of labor and overhead costs necessary to convert raw materials into finished goods.
Direct Materials
Raw materials that are consumed in the manufacturing process and are directly incorporated into the finished product.
Weighted-Average Method
An inventory costing method that assigns the average cost of goods available for sale to both ending inventory and cost of goods sold.
Conversion Costs
The combined costs of direct labor and manufacturing overhead, which are incurred to convert raw materials into finished products.
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