On 7 September 2017, Leonard Ltd purchased a used machine for $48,000. The cost was debited...
- On 7 September 2017, Leonard Ltd purchased a used machine for $48,000. The cost was debited to the Machinery account. Prior to use, additional cash expenditures were made for painting and repairing the machine, $4,200, and installing and testing the machine, $3,000. These additional expenditures were debited to Repairs and Maintenance Expense. The repairs and installation were completed on 10 October 2017, after which the machine was available for use for the first time. The useful life was estimated at 5 years from the date of availability, and the residual value estimated at $4,000. Leonard Ltd will use the declining balance method of depreciation, calculated at twice the straight-line rate.
Required:
Prepare the correcting and/or adjusting journal entries for the financial year.
Homework Answers
| Correcting Entry | ||||
| Trans | Accounts Title | Dr | Cr | |
| 1) | Machinery (4200+3000) | $7200 | ||
| Repair and Maintenance expenses | 7200 | |||
| Depreciation expenses-Machinery | 5520 | |||
| Accumulated Depreciation-Machinery | 5520 | |||
| (48000+7200)*40%*3/12 | ||||
| DDb rate=1/5*200% | 40% | |||
| This is complete journal adjusting entry | ||||
| If the entry has already been passed than for depreciation on | ||||
| correcting entry than the entry is | ||||
| Depreciation expenses-Machinery | 720 | |||
| Accumulated Depreciation-Machinery | 720 | |||
| 7200*40%*3/12 | ||||
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On January 1, 2017, Sage SA purchased the following two machines
for use in its production process.
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machinery during its first year of operations. Sage estimates that
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