Question

On July 1, 2019, Wildhorse Co. purchased new equipment for $70,000. Its estimated useful life was 5 years with a $12,000 salvage value. On December 31, 2022, the company estimated that the equipment's remaining useful life was 10 years, with a revised salvage value of $5,000. Prepare the journal entry to record depreciation on December 31, 2019. (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 Ofor the amounts.) Account Titles and Explanation Debit Credit eTextbook and Media List of Accounts Prepare the journal entry to record depreciation on December 31, 2020. (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 Ofor the amounts.) Account Titles and Explanation Debit Credit

Answer 1

initial annual depreciation = ($70,000 cost - $12,000 salvage value) / 5 years useful life

=>$11,600.

journal entry on december 31 2019.

(for six months from july to december)

depreciation expense a/c ($11,600*6 months/12)	$5,800
...........To accumulated depreciation a/c		5,800

journal entry on december 31 2020.

depreciation expense a/c	$11,600
..........To accumulated depreciation a/c		11,600

revised annual depreciation for december 31 2022.

balance in asset equipment account = $70,000-5800 for 2019-11600 for 2020-11600 for 2021

=>$41,000.

annual depreciation = ($41,000-$5000 revised salvage value) / 10 years remaining useful life

=> $3,600.

journal entry for december 31 2022

depreciation expense a/c	3,600
............To accumulated depreciation a/c		3,600

balance of accumulated depreciation on december 31 2022 => (5800+11600+11600+3600)=>$32,600.