Machinery purchased for $61,800 by Swifty Co. in 2016 was originally estimated to have a life of 8 years with a salvage value of $4,120 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 $4,635 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 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount
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 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount
a) Journal entry
Date | account and explanation | Debit | Credit |
No Journal entry | |||
b) Accumulated depreciation = (61800-4120)/8*5 = 36050
2021 Depreciation = (61800-36050-4635)/5 = 4223
Date | account and explanation | Debit | Credit |
Depreciation expense | 4223 | ||
Accumulated depreciation-equipment | 4223 | ||
Machinery purchased for $61,800 by Swifty Co. in 2016 was originally estimated to have a life...
Machinery purchased for $61,800 by Swifty Co. in 2016 was
originally estimated to have a life of 8 years with a salvage value
of $4,120 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 $4,635 at
the end of that time. Assume straight-line depreciation.
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