Question

p arn-us-cast-1-prod- Machinery was acquired at the beginning of the year at a cost of $67,800 that has an estimated residual value of $3,800 and an estimated useful life of eight years. The machinery is expected to produce 120,000 units. In the current year, the company produced 20,000 units. R1: Determine the (a) depreciable cost (b) annual straight-line depreciation R2: Record the entries for depreciation R3: Determine the Net Book Value at the end of the year ! Machinery was acquired at the beginning of the year at a cost of $67,800 that has an estimated residual value of $3,800 and an estimated useful life of eight years. The machinery is expected to produce 120,000 units. In the current year, the company produced 20,000 units. R1: Determine the (c) depreciable cost (d) depreciation R2: Record the entries for depreciation R3: Determine the Net Book Value at the end of the year

Answer 1

1 R1 journal entries year 1 R3 annual straight book value at line end of year the end of year depreciation 67800 59800 8000 51800 8000 43800 8000 35800 8000 27800 8000 19800 8000 11800 8000 3800 8000 total depreciation (a) 64000 WN year 2 year 3 year 4 total depreciable cost = book value - residual value 67800-3800 = 64000 debit credit depreciation account 8000 to machinery account 67800 (to record depreciation) depreciation account 8000 to machinery account 59800 (to record depreciation) depreciation account 8000 to machinery account 51800 (to record depreciation) depreciation account 8000 to machinery account 43800 (to record depreciation) depreciation account depreciati 8000 to machinery account 35800 (to record depreciation) depreciation account 8000 to machinery account 27800 (to record depreciation) depreciation account 8000 to machinery account 19800 (to record depreciation) depreciation account 8000 to machinery account 11800 (to record depreciation) year 5 depreciation = total depreciable cost / years 64000/8 = 8000 year 6 book value = book value of previous year - depreciation book value of previous year - depreciation year 7 in straight line depreciation depreciation cost is same for all years year 8