Question

Machinery purchased for $71,400 by Waterway Co. in 2016 was originally estimated to have a life of 8 years with a salvage value of $4,760 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 $5,355 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 O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually) Credit Account Titles and Explanation Debit eTextbook and Media List of Accounts 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 Credit Debit eTextbook and Media List of Accounts

Answer 1

Waterway Co. Journal Enteries Trans. Particulars Debit in $ Credit in $ a. There is no correction needed for prior years 2021 4879 Depreciation Expense a/c Dr. To Accum. Depre - Equip. (To record Depreciation) (71400 - 4760 ) / 8 = 8330 x 5 = 41650 71400 - 41650 = 29750 (29750 - 5355 )/5 = 4879