During 2016, Ryel Company’s controller asked you to prepare correcting journal entries for the following three situations:
1. Machine A was purchased for $ 50,000 on January 1, 2011. Straight- line depreciation has been recorded for 5 years, and the Accumulated Depreciation account has a balance of $ 25,000. The estimated residual value remains at $ 5,000, but the service life is now estimated to be 1 year longer than estimated originally.
2. Machine B was purchased for $ 40,000 on January 1, 2014. It had an estimated residual value of $ 5,000 and an estimated service life of 10 years. It has been depreciated under the double- declining- balance method for 2 years. Now, at the beginning of the third year, Ryel has decided to change to the straight- line method.
3. Machine C was purchased for $ 20,000 on January 1, 2015. Double- declining- balance depreciation has been recorded for 1 year. The estimated residual value of the machine is $ 2,000 and the estimated service life is 5 years. The computation of the depreciation erroneously included the estimated residual value.
Required:
Prepare any necessary correcting journal entries for each situation. Also prepare the journal entry necessary for each situation to record depreciation expense for 2016.