Question

Exercise 11-11 Machinery purchased for $63,600 by Skysong Co. in 2016 was originally estimated to have a life of 8 years with a salvage value of $4,240 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2021, it is determined that the total estimated life should be 10 years with a salvage value of $4,770 at the end of that time Assume straight-line depreciation Prepare the entry to correct the prior years' depreciation, if necessary. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Prepare the entry to record depreciation for 2021. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Use Machinery related account.) Account Titles and Explanation Debit Credit Open Show Work Click if you would like to Show Work for this question:

Answer 1

a
Account Titles and Explanation	Debit	Credit
NO entry	0
NO entry		0
b
Account Titles and Explanation	Debit	Credit
Depreciation expense	4346
Accumulated Depreciation-Equipment		4346
Workings:
Cost	63600
Less: Salvage value	4240
Depreciable cost	59360
Divide by useful life	8
Annual depreciation	7420
Accumulated depreciation for 5 years	37100	=7420*5
Book value year 5	26500	=63600-37100
Book value year 5	26500
Less: Revised Salvage value	4770
Depreciable cost	21730
Divide by Remaining useful life	5
Revised Annual depreciation	4346