Question

less total mated useful life was changed from six to four years, and the estimated salvage to $14,345. Recorded annual straight-line depreciation on the machinery. The machine's estima value was increased to $14 Check Dec. 31. Year 2 Dr. Depr. Expense Machinery, $27,500 Mar 3 annual straight-line depreciation on the machinery. Recorded annual straig --year life 000 units n Year 2, ed by the e cannot id the machine for $25,240 cash. Dec. 31, Year 3: Dr. Loss on Disposal of Machinery $16,605 31 Sold the mach Aequired al entries to record these transactions and events. Payure journal entries and total January 1, Walker purchas sarricity to the machine a Tulber purchased a uscd machine for $150,000. On January 4, Walker paid $3.510 to wire the machine and an additional $4,600 to secure it in place. The machine will be used for Ethion and have an $18,110 salvage value. Straight-line depreciation is used. On December 31, at the Hits sixth year of use, the machine is disposed of. Problem 10-6B Disposal of plant assets C1 P1 P2 Required B, and ice and rements valued Prenare journal entries to record the machine's purchase and the costs to ready it for use. Cash is paid for all costs incurred. 2. Prepare journal entries to record depreciation of the machine at December 31 of (a) its first year of operations and (b) the year of its disposal. 3. Prepare journal entries to record the machine's disposal under each separate situation: (a) it is sold for $28,000 cash; (b) it is sold for $52,000 cash; and (c) it is destroyed in a fire and the insurance company pays $25,000 cash to settle the loss claim. Check (20) Dept. Exp.. $20,000 (30) Dr. Loss from Fire. $13,110

Problem 10-6B I took a picture of (first picture)

and problem 10-2B is the following:

On January 1, Manning Co. purchases and installs a new machine costing $324,000 with a five-year life and an estimated $30,000 salvage value. Management estimates the machine will produce 1,470,000 units of product during its life. Actual production of units is as follows: 355,600 in Year 1, 320,400 in Year 2, 317,000 in Year 3, 343,600 in Year 4 and 138,500 in Year 5. The total number of units produced by the end of Year 5 exceeds the original estimate - this difference was not predicted.

Answer 1

Answer for 10-2B:

Year	Straight-line	Units-of-production	Double-declining balance
1	58,800.00	70,874.11	129,600.00
2	58,800.00	63,858.45	77,760.00
3	58,800.00	63,180.80	46,656.00
4	58,800.00	68,482.41	27,993.60
5	58,800.00	27,604.23	11,990.40
Total	294,000.00	294,000.00	294,000.00

Calculation of depreciation by Straight-line depreciation method is as follows:

Costofasset - Salvageval ue Depreciation = Estimateduse fullife

= (324,000 - 30,000) / 5 years = 58,800 USD

Calculation of depreciation by Units-of-production method is as follows:

$Depreciation = \frac{Cost of asset-Salvage value}{Estimated useful life}XProduction units per year$

Year	Actual production units	Depreciation
1	355,600.00	70,874.11
2	320,400.00	63,858.45
3	317,000.00	63,180.80
4	343,600.00	68,482.41
5	138,500.00	27,604.23
Total	1,475,100.00	294,000.00

Calculation of depreciation by Double-declining balance method is as follows:

$Depreciation = 2 X \frac{Straight line depreciation}{Cost of asset - salvage value} X Opening balance of book value of asset$

Year	Opening balance	Depreciation	Closing balance
1	324,000	129,600.00	194,400
2	194,400	77,760.00	116,640
3	116,640	46,656.00	69,984
4	69,984	27,993.60	41,990
5	41,990	11,990.40	30,000
		294,000.00

Answer for 10-6B:

Que.	Date	Account Titles and Explanation	PR	Debit Amount	Credit Amount
1	01/01 - Year 1	Machine		150,000
		Cash			150,000
		(To record the purchase of machine)
	01/04 - Year 1	Machine		3,510
		Cash			3,510
		(To record expenses to wire electricity to the machine)
	01/04 - Year 1	Machine		4,600
		Cash			4,600
		(To record additional expenses to secure the machine in place)
2	12/31 - Year 1	Depreciation		20,000
		Accumulated depreciation			20,000
		(To record depreciation expense at the end of 1st year, calculated as {(158,110-18,110)/7})
	12/31 - Year 6	Depreciation		20,000
		Accumulated depreciation			20,000
		(To record depreciation expense at the end of 6th year, calculated as {(158,110-18,110)/7})
3a	12/31 - Year 6	Cash		28,000
		Accumulated depreciation		120,000
		Loss on disposal of asset		10,110
		Machine			158,110
		(To record disposal of asset at loss of USD 10,110. {Acc. Dep. = 20,000*6years})
3b	12/31 - Year 6	Cash		52,000
		Accumulated depreciation		120,000
		Profit on disposal of asset			13,890
		Machine			158,110
		(To record disposal of asset at profit of USD 13,890)
3c	12/31 - Year 6	Cash		25,000
		Accumulated depreciation		120,000
		Loss on fire		13,110
		Machine			158,110
		(The balance amount in asset account is moved to impairment account to record loss on fire)