On December 31 2016 Vail Company owned the following assets Vail
On December 31, 2016, Vail Company owned the following assets:
Vail computes depreciation and amortization expense to the nearest whole year. During 2017, Vail engaged in the following transactions:
Jan. 3 Extended the building at a cost of $ 30,000. The extension provided an addition to the service potential of the building.
Mar. 7 Sold a piece of office machinery that had originally cost $ 4,000 and that had accumulated depreciation of $ 1,952 on December 31, 2016. The machine was sold for $ 3,000. May 17 Purchased office fixtures and office machinery for $ 9,200. The supplier reduced the price because of the joint purchase. If purchased separately, the office fixtures would have cost $ 6,000 and the office machinery $ 4,000. Delivery costs paid by Vail were $ 200. The machinery was accidentally damaged during installation and cost $ 230 to repair. The office fixtures have an estimated life of 5 years and a residual value of $ 250. The office machinery has an estimated life of 10 years and a residual value of $ 500.
Aug. 10 Exchanged the president’s desk ( classified as office fixtures) for a larger desk belonging to a friend of the president. The desk had cost $ 600 and had accumulated depreciation on December 31, 2016, of $ 400 and an estimated residual value of $ 100. The new desk had a value of $ 900 and $ 700 cash was paid.
Oct. 20 Serviced and adjusted the office machinery at a cost of $ 125.
1. Check the accuracy of the accumulated depreciation balances at December 31, 2016. Round to the nearest whole dollar in all requirements.
2. Prepare journal entries to record the preceding events in 2017, as well as the year- end recording of depreciation expense.
3. Prepare an Accumulated Depreciation account for each category of assets, enter the beginning balance, post the journal entries from Requirement 2, and compute the ending balance.
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