Wettlauffer Company Ltd. shows the following entries in its Equipment account for 2020. All amounts are based on historical cost.

Instructions

a. Prepare any necessary correcting entries.

b. Assuming that depreciation is to be charged for a full year based on the ending balance in the asset account no matter when acquired, calculate the proper depreciation charge for 2020 under both methods listed below. Round amounts of depreciation to the nearest dollar. Assume an estimated life of 10 years for all equipment at the time of acquisition, with no residual value. The equipment included in the January 1, 2020 Equipment balance was purchased in 2018.

1. Straight-line

2. Declining-balance (assume twice the straight-line rate)

Transcribed Image Text:

Equipment 134,750 6/30 cost of equipment sold Balance 1/1 8/10 Purchases of equipment 32,000 (purchased prior to 2020) 23,000 8/12 Freight on equipment purchased 700 2,700 500 8/25 Installation costs 11/10 Repairs