Question

The following data relate to the Machinery account of Tamarisk, Inc. at December 31, 2020. Machinery D Original cost Year purchased Useful life Salvage value $53,360 2015 10 years $3,596 Sum-of-the- years -digits $36,192 $59,160 2016 15,000 hours $3,480 Activity $92,800 2017 15 years $5,800 Straight- $92,800 2019 10 years $5,800 line Depreciation method Accum. depr through 2020* Double-declining balance $18,560 $40,832 $17,400 $18 56 *In the year an asset is purchased, Tamarisk, Inc. does not record any depreciation expense on the asset. In the year an asset is retired or traded in, Tamarisk, Inc. takes a full year's depreciation on the asset. The following transactions occurred during 2021. (a) On May 5, Machine A was sold for $15,080 cash. The company's bookkeeper recorded this retirement in the following manner in the cash receipts journal. Cash 15,080 Machinery (Machine A) 15,080 (b) On December 31, it was determined that Machine B had been used 2,250 hours during 2021. (c) On December 31, before computing depreciation expense on Machine C, the management of Tamarisk, Inc. decided the useful life remaining from January 1, 2021, was 10 years. (d) On December 31, it was discovered that a machine purchased in 2020 had been expensed completely in that year. This machine cost $32,480 and has a useful life of 10 years and no salvage value. Management has decided to use the double-declining-balance method for this machine, which can be referred to as "Machine E."

Answer 1

No	Account Titles & Explanations	Debit	Credit
(a)	Depreciation Expense	$4524
	Accumulated Depreciation		$4524
	(To record current depreciation)
	Accumulated Depreciation ($36192 + $4524)	$40716
	Machinery ($53360 - $15080)		$38280
	Gain on Disposal		$2436
	(To properly record the sale)
(b)	Depreciation Expense	$8352
	Accumulated Depreciation		$8352
	(To record current depreciation)
(c)	Depreciation Expense	$6960
	Accumulated Depreciation		$6960
	(To record current depreciation)
(d)	Machinery	$32480
	Retained Earnings		$32480
	(To Record the original purchase of the machine)

*Depreciation on machinery A for year 2021 = [(Cost – Salvage)/(Total of sum of year digit)] * 5

Total of sum of year digit = 1+2+3+4+5+6+7+8+9+10 = 55

[($53360 - $3596)/55] * 5 = $4524

* Depreciation on machinery B for year 2021 = [(Cost – Salvage)/(Total Hours)] * Hours during current year

                           = [($59160 - $3480)/15000 hours] * 2250 hours = $8352

*Depreciation on machinery C for year 2021 = ($92800 - $5800 - $17400)/10 years = $6960