Question

CALCULATOR MESSAGE MY INSTRUCTOR FULL SCREEN PRINTER VERSION CK NEXT Problem 9-03A a-c (Video) (Part Level Submission) On January 1, 2020, Evers Company purchased the following two machines for use in its production process Machine A: The cash price of this machine was $48,000. Related expenditures included sales tax $1,700, shipping costs $150, insurance during shipping $80, installation and testing costs $70, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Evers estimates that the use life of the machine is 5 years with a $5,000 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used The recorded cost of this machine was $180,000. Evers estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period. Machine B: (a) Prepare the following for Machine A. (Round answers to decimal places, e.. 2,125. Cred account title are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the accounties and enter for the amounts.) 1. The journal entry to record its purchase on January 1, 2020 2. The yournal entry to record annual depreciation at December 31, 2020 No. Account Titles and Explanation Debit Click you would like to show Work for this questioni Don Show Work

Answer 1

SOLUTION

No.	Account titles and Explanation	Debit ($)	Credit ($)
1.	Equipment	50,000
	Cash		50,000
2.	Depreciation expense	9,000
	Accumulated depreciation- Equipment		9,000

Working-

1.

Purchase price	48,000
Sales tax	1,700
Shipping costs	150
Insurance during shipping	80
Installation and testing	70
Total cost of machine	50,000

2. Annual depreciation = (Purchase cost - Salvage value) / Estimated useful life

= (50,000 - 5,000) / 5 years

= 45,000 / 5 = 9,000