Question

Swifty Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5 years; salvage value $14,300 $528,800 Building, estimated service life, 30 years, no salvage value $759,000 The equipment has been depreciated using the sum of the years'-digits method for the first 3 years for financial reporting purposes. In 2021, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method port (a) Prepare the general journal entry to record depreciation expense for the equipment in 2021. (b) Prepare the journal entry to record depreciation expense for the building in 2021. (Round answers to decimal places, s. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts) Debit Credit No. Account Titles and Explanation (a) (6)

Answer 1

Answer
Equipment :
Sum of year digit = 5+4+3+2+1 = 15
Accumulated depreciation 2018 to 2021 = (528800-14300)*12/15 = 411600
2021 Depreciation = (528800-14300-411600)/2 = 51450
Building :
Accumulated depreciation 2018 to 2021 = (759000-0)*3/30 = 75900
2021 Depreciation = (759000-0-75900)/37 = 18462
a) Journal entry
Date	account and explanation	debit	credit
2021	Depreciation expense	$51,450
	Accumulated depreciation-equipment		$51,450
	(To record dep)
b) Journal entry
Date	account and explanation	debit	credit
2018	Depreciation expense	$18,462
	Accumulated depreciation-Building		$18,462
	(To record dep)