Machinery purchased for $70,200 by Sheffield Co. in 2016 was originally estimated to have a life of 8 years with a salvage value of $4,680 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 $5,265 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 |
---|
a) Journal entry
Account Titles and Explanation |
Debit |
Credit |
---|---|---|
No Journal entry | 0 | |
b) Journal entry
Accumulated depreciation = (70200-4680/8*5) = 40950
Revised depreciation = (70200-40950-5265/5) = 4797
Account Titles and Explanation |
Debit |
Credit |
---|---|---|
Depreciation expense | 4797 | |
Accumulated depreciation-Machinery | 4797 |
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originally estimated to have a life of 8 years with a salvage value
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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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