Question

Skysong Company shows the following entries in its Equipment account for 2021. All amounts are based on historical cost. Equipment 2021 2021 Jan. 1 Balance 141,600 June 30 Cost of equipment sold Aug. 10 Purchases 32,950 (purchased prior to 2021) 21,040 12 Freight on equipment purchased 780 25 Installation costs 2,680 Nov. 10 Repairs 530 Prepare correcting entry 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 eTextbook and Media List of Accounts 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 2021 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, 2021, balance was purchased in 2019. (Round answers to 0 decimal places, e.g. 45,892.) (1) Straight-line $ (2) Sum-of-the-years'-digits $

Answer 1

Ans:

A). Correction entry if required:

Date	Account title and explanation	Debit($)	Credit($)
	Repair expense	530
	Equipment		530
	( to record correction entry for wrongly debited repair)

B). Balance of equipment for the period ending on December 31.

Particulars	Amt($)	Amount($)
Balance on Jan 1		$141,600
Add:
Purchases	$32,950
Freight on equipment	780
Installation costs	$2,680
		36,410
Less: cost of equipment sold		(21,040)
Balance of equipment on December 31		$156,970

Depreciation for year under straight line method:

Straight line depreciation:Value of asset/ life of an assets

: 156,970/10= $15,697

Depreciation for year under sum -of year digit method:

Particulars	Computation	Amount($)
Depreciation for the equipment on 2019**	(141,600-21,040)*8/55	17,536
Depreciation for the equipment on 2021	36,410*10/55	6,620
Total depreciation		24,156

**= 10(10+1)/2 (10= years )

=55