Question

Machinery purchased for $64.800 by Windsor Co. in 2016 was originally estimated to have a life of 8 years with a salvage value of $4.320 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2021, it is determined that the total estimated life should be 10 years with a salvage value of $4,860 at the end of that time. Assume straight-line depreciation. Prepare the entry to correct the prior years' depreciation, if necessary. (If no entry is required, select "No entry for the account titles and enter for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit e Textbook and Media List of Accounts Prepare the entry to record depreciation for 2021. (If no entry is required, select "No entry for the account titles and enter for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Use Machinery related account.) Account Titles and Explanation Debit Credit

Answer 1

Ans:

Depreciation for earlier Years=64800-4320/8=7560
	Original cost				64,800
	Less: Accumulated dep (7560*5)				37800
	book value				27,000
	less revised salvage value				-4860
	cost to be depreciated				22,140
	revised useful life				5
	Depreciation expense				4428
1.No journal entry for prior years
2	Journal entry to record depreciation for 2021
					Debit	Credit
	Depreciation expense				$ 4,428
	Accumulated depreciation					$ 4,428