Question

Instructions X Chart of Accounts х CHART OF ACCOUNTS Gundrum Company purchased equipment on January 1, 2015 for $874,600. The equipment was expected to have a useful life of 10 years and a salvage value of $32,000. Gundrum uses the straight-line method of depreciation. At the beginning of 2020, Gundrum determined the total estimated life of the equipment was 13 years and the residual value would be $10,400 at the end of that time. Gundrum Company General Ledger Required: Prepare any entry needed in 2020 to account for this change. ASSETS REVENUE 111 Cash 411 Sales Revenue 121 Accounts Receivable 141 Inventory EXPENSES 152 Prepaid Insurance 500 Cost of Goods Sold General Journal 181 Equipment 511 Insurance Expense 512 Utilities Expense 189 Accumulated Depreciation Prepare any entry needed in 2020 to account for this change. Record depreciation expense for 2020 on December 31, 2020. 521 Salaries Expense 532 Bad Debt Expense LIABILITIES General Journal Instructions 540 Interest Expense 211 Accounts Payable 541 Depreciation 231 Salaries Payable Expense PAGE 1 250 Unearned Revenue 559 Miscellaneous GENERAL JOURNAL Expenses 261 Income Taxes Payable DATE ACCOUNT TITLE POST. REF DEBIT CREDIT 910 Income Tax 1 Expense 2 EQUITY 311 Common Stock 331 Retained Earnings

Answer 1

Annual Depreciation before 2020 =(874600-32000)/10 =84600/10 =84260 Total depreciation for 2015 to 2020 =84260*5 =421300 Book Value of 2020 =874600-421300 =453300 New useful Life =13-5 =8 Years Annual depreciation of 2020 =(453300-10400)/8 =442900/8 =55363 Credit Date Account Title Debit Dec-20 Depreciation Expenses $ 55,363 Accumulated Depreciation $ 55,363