Question

In January 2017, installation costs of $5,800 on new machinery were charged to Maintenance and Repairs Expense. Other costs of this machinery of $29,000 were correctly recorded and have been depreciated using the straight-line method with an estimated life of 10 years and no salvage value. At December 31, 2018, it is decided that the machinery has a remaining useful life of 20 years, starting with January 1, 2018. What entries should be made in 2018 to correctly record transactions related to machinery, assuming the machinery has no salvage value? The books have not been closed for 2018 and depreciation expense has not yet been recorded for 2018. (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
Dec. 31
	(To correct for the error of expensing installation costs on machinery acquired in January, 2017)
	(To record depreciation on machinery for 2018 based on a 20-year useful life)

Answer 1

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Solution: Naming convention in not available, can be slightly different: Credit Date Dec.31 Journal entries Account title and explaination Debit Machinery $ 5,800 Retained Earning (5800/10)*9 $ Accumulated Depreciation (5800/10)*1 $ (To correct for the error of expensing installation costs on machinery) Depreciation Expense $ 1,566 Accumulated Depreciation $ (To record depreciation on machinery for 2018 based on a 20-year useful life) 5,220 580 Dec.31 1,566 (29000-2900)+(5800-580) Working: Book value on Jan.01, 2018 Useful life Depreciation 31320 20 (31320/20) $ 1,566