Question

Problem 11-4 Whispering Winds Tool Corp. records depreciation annually at the end of the year. Its policy is to take a full year’s depreciation on all assets that are used throughout the year and depreciation for half a year on all machines that are acquired or disposed of during the year. The depreciation rate for the machinery is 10%, applied on a straight-line basis, with no estimated scrap or residual value. The balance of the Machinery account at the beginning of 2020 was $172,300; the Accumulated Depreciation on Machinery account had a balance of $72,900. The machinery accounts were affected by the following transactions that occurred in 2020: Jan. 15 Machine no. 38, which cost $9,400 when it was acquired on June 3, 2013, was retired and sold as scrap metal for $600. Feb. 27 Machine no. 81 was purchased. The fair value of this machine was $23,500. It replaced two machines, nos. 12 and 27, which were traded in on the new machine. Machine no. 12 was acquired on February 4, 2008, at a cost of $5,500 and was still carried in the accounts, although it was fully depreciated and not in use. Machine no. 27 was acquired on June 11, 2013, at a cost of $8,200. In addition to these two used machines, Whispering Winds paid $4,000 in cash. Apr. 7 Machine no. 54 was equipped with electric controls at a cost of $1,740. This machine, originally equipped with simple hand controls, was purchased on December 11, 2016, for $1,800. The new electric controls can be attached to any one of several machines in the shop. 12 Machine no. 24 was repaired at a cost of $720 after a fire caused by a short circuit in the wiring burned out the motor and damaged certain essential parts. July 22 Machines 25, 26, and 41 were sold for $3,900 cash. The purchase dates and cost of these machines were as follows: No. 25 May 8, 2012 $4,000 No. 26 May 8, 2012 3,200 No. 41 June 1, 2014 2,800

1.Record each transaction in general journal form. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit January 15 February 27 April 7 April 12 July 22

2.Calculate and record depreciation for the year. None of the machines currently included in the balance of the account was acquired before January 1, 2012. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit December 31

Answer 1

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Worikin Noto oking a Macine No 38 4moud ( 3 June 13 Hachine Acquised ai Dec12 Depeciotiau O107. AJan 14 Cot o Hacine 31 Dec 11 Depicciation o ro% x40) 9400 2 (470) %430 (SEy0) Cant Hachint an ATn2020 2020 @ID for 6t Cant al Hacline an IS Jan 2020 42 90 Lew's Depreciatiou 2220 2820 Hachine au K Jan2010 600 Hactiue Sale oes on Sele 27Looein However Harhine Alo 12 as ulty olneciatia Machine No 11 a 27 t dloes nat Lewe Cont t'sex ale Machine No 27 Ancut u June 1, 213 Hachie Acquired der Six Mou th Depreciatin H 2pDeconbr 2 013 Lut at Machiue as an ATaun 2014 8200 (410) 330) (CT4o) s a 21Feb2020 Cnt al Marhiue

On Machine Na" 2, 26, and 4 Mancldue 25 Amaut 4 D00 Maya, 2a12 Punclae LantDepreciahia till Dee 122 Hachyne 2 00) 4oeex to's, x Cout al Hacliue au 1Jan 213 heus Defnesiatian fiu 2019 2&00 (2800) Lunt af Machine an 4Jan2e20 1 DoD (200) isDepneciatian fon 6manth Cnt af Hautine an ale &00 Hechiu Not 26 2,2 00 260) Purchae ly&,2a12 Hachine 2200 x 10, x ut af Ha chin sn 4Jan 013 2o40 hau' Depreciation u a1 37o0x10 tent af Haciue an 4 Jan 2020 (2240) 1o OD Ausi Depriiation yyaur(160) X to 940 Hachine 11 June 1,2014 Pupelune of Hacdi Lmt Depneciatian ter &muth Ceutof Mactine 1Tan 2e1 Laa Deprectiotion Syne xo 2eoo 2640 (1400) 1260 km Depuciatier fen bwonkr H201

Tetal Cact o Machine 26 cnd 41 are g00 +8 40 tl20 2760 2 Qaldi fon 2900 2 Manchine 29B0-276o Prgit Sale 2 an 1140 2

Note:

1) In the above solutions all the amount were taken in dollars.

2) It is assume that the accounting year end on 31 December every because there no information has been provided when the accounting year is ending.

3) The machinery which are sold are purchase on the beginning of the year were depreciated on the half year basis.

4) As the depreciation is provided on straight line basis I have simply take the amount of depreciation and multiplied with it number of years.

Question no. 2

I'm not getting this question due to lack of information like which year depreciation has to provide or we have theto record depreciation on opening if we have to record the depreciation on opening balance then the entry for it as follow

Depreciation A/c ......................Dr. 24520 To Accumulated Depreciation A/c. 24520

Accumulated Depreciation A/c .............Dr. 24520

To Machines A/c. 24520

However, depreciation should be provided on straight line basis so the depreciation should on the cost the cost of all machine according to me equal to ( 172300+72900)= 245200

On this value @10% depreciation is = 24520