Question

Wildhorse Company shows the following entries in its Equipment account for 2018. All amounts are based on historical Cou cost. Equipment Ki Не 2018 2018 Jan. 1 Balance 122,020 June 30 Cost of equipment sold Aug. 10 Purchases 35,070 (purchased prior to 2018) 20,980 PRI 12 Freight on equipment purchased 750 25 Installation costs 2,950 кerгc Nov. 10 Repairs ildh 540 Prepare correcting entry if necessary. (If no entry is required, select "No entry" for the account titles and enter 0 20 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Jan. ug. Account Titles and Explanation Debit Credit ov. Assuming that depreciation is to be charged for a full year on the ending balance in the asset account, compute the proper depreciation charge for 2018 under each of the methods listed below. Assume an estimated life of 10 years, with no salvage value. The machinery included in the January 1, 2018, balance was purchased in 2016. (Round answers to o decimal places, e.g. 45,892.) гера uto ints. C Acco (1) Straight-line (2) Sum-of-the-years'-digits $

Answer 1

1) Debit Credit Correcting entries: Account Titles and explanations Maintenance and Repairs Expense Equipment S540 $540 1) 2) Straight-line Sum-of-the-years-digits $13,981 $21,746 Workings: The proper ending balance in the asset account: January 1, 2018 $122.020 Add: New Equipment Purchases $35,070 Freight on equipment purchased $750 Installation costs $2.950 Less: Cost of equipment sold $20.980 December 31, 2018 $139,810 Depreciation on Straight line method: = $139,810 / 10 years = $13,981 Depreciation on Sum-of-the-years-digits method: Sum-of-the-years'-digits method= (Cost - residual value) * Declining years / Sum of the years) Sum of the year = [n* (n + 1)] /2 = [10 * (10 + 1)] /2 55 For equipment purchased in 2016 = $122,020 - $20,980 = $101,040 Dpreciation expense in 2018 = $101,040 * 8/55 = $14.697 For equipment purchased in 2018 = $35,070 + $750 + $2,950 = $38.770 Dpreciation expense in 2018 = $38,770 * 10/55 = $7,049 Total depreciation in 2018 = $14,697 + $7,049 = $21,746

1) The total of depletion for 2017. Depletion for 2017 S7,092,900 Workings: Depletion per unit = (Mine acquiring cost + Development cost + Fair value of land - Land value) / Ore appear to be in the mine = ($3,404.400 + $209.100 + $49,200 - $123,000)/13.110,000 units = $35,39,700 / 13.11.000 units $2.70 The total amount of depletion for 2017 = 2.627,000 units * $2.70 depletion per unit = $7,092,900 2) The amount that is charged as an expense for 2017 for the cost of the minerals sold during 2017: Amount that is charged as an expense for 2017 = 2,067,000 units * $2.70 depletion per unit = $5,580,900