On January 1, 2022, Pina Colada Company purchased the following two machines for use in its...

Transcribed Image Text:

On January 1, 2022, Pina Colada Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $43,500. Related expenditures also paid in cash included: sales tax $3,550, shipping costs $150, insurance during shipping $50, installation and testing costs $100, and $200 of oil and lubricants to be used with the machinery during its first year of operations. Pina Colada estimates that the useful life of the machine is 5 years with a $5,250 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. Machine B: The recorded cost of this machine was $180,000. Pina Colada estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period. Prepare the following for Machine A. (Round answers to O decimal places, e.g. 5,125. List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) 1. The journal entry to record its purchase on January 1, 2022. 2. The journal entry to record annual depreciation at December 31, 2022. No. Account Titles and Explanation 1. Equipment Cash 2. Depreciation Expense Accumulated Depreciation-Equipment Debit 47,350 8,420 Credit 47,350 8,420 Calculate the amount of depreciation expense that Pina Colada should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to O decimal places, e.g. 2,125.) (1) Pina Colada uses the straight-line method of depreciation. (2) Pina Colada uses the declining-balance method. The rate used is twice the straight-line rate. (3) Pina Colada uses the units-of-activity method and estimates that the useful life of the machine is 136,000 units. Actual usage is as follows: 2022, 52,000 units; 2023, 39,000 units; 2024, 26,000 units; 2025, 19,000 units. +A S 2022 42500 $ 90000 +A $ 65000 $ +A 2023 Depreciation Expense 42500 45000 48750 HA A +A 2024 42500 22500 S 2025 42500 12500 32500 $ 23750 Calculate the amount of depreciation expense that Pina Colada should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to O decimal places, e.g. 2,125.) (1) Pina Colada uses the straight-line method of depreciation. (2) Pina Colada uses the declining-balance method. The rate used is twice the straight-line rate. (3) Pina Colada uses the units-of-activity method and estimates that the useful life of the machine is 136,000 units. Actual usage is as follows: 2022, 52,000 units; 2023, 39,000 units; 2024, 26,000 units; 2025, 19,000 units. Straight- line 2022 42500 $ Depreciation Expense 2023 2024 42500 +A method Declining- balance $ 90000 $ 45000 S method Units-of- activity $ 65000 $ tf 48750 $ +A method 42500 22500 32500 202 Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense in year 1 (2022)? The highest amount in year 4 (2025)? The highest total amount over the 4-year period? T On January 1, 2022, Pina Colada Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $43,500. Related expenditures also paid in cash included: sales tax $3,550, shipping costs $150, insurance during shipping $50, installation and testing costs $100, and $200 of oil and lubricants to be used with the machinery during its first year of operations. Pina Colada estimates that the useful life of the machine is 5 years with a $5,250 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. Machine B: The recorded cost of this machine was $180,000. Pina Colada estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period. Prepare the following for Machine A. (Round answers to O decimal places, e.g. 5,125. List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) 1. The journal entry to record its purchase on January 1, 2022. 2. The journal entry to record annual depreciation at December 31, 2022. No. Account Titles and Explanation 1. Equipment Cash 2. Depreciation Expense Accumulated Depreciation-Equipment Debit 47,350 8,420 Credit 47,350 8,420 Calculate the amount of depreciation expense that Pina Colada should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to O decimal places, e.g. 2,125.) (1) Pina Colada uses the straight-line method of depreciation. (2) Pina Colada uses the declining-balance method. The rate used is twice the straight-line rate. (3) Pina Colada uses the units-of-activity method and estimates that the useful life of the machine is 136,000 units. Actual usage is as follows: 2022, 52,000 units; 2023, 39,000 units; 2024, 26,000 units; 2025, 19,000 units. +A S 2022 42500 $ 90000 +A $ 65000 $ +A 2023 Depreciation Expense 42500 45000 48750 HA A +A 2024 42500 22500 S 2025 42500 12500 32500 $ 23750 Calculate the amount of depreciation expense that Pina Colada should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to O decimal places, e.g. 2,125.) (1) Pina Colada uses the straight-line method of depreciation. (2) Pina Colada uses the declining-balance method. The rate used is twice the straight-line rate. (3) Pina Colada uses the units-of-activity method and estimates that the useful life of the machine is 136,000 units. Actual usage is as follows: 2022, 52,000 units; 2023, 39,000 units; 2024, 26,000 units; 2025, 19,000 units. Straight- line 2022 42500 $ Depreciation Expense 2023 2024 42500 +A method Declining- balance $ 90000 $ 45000 S method Units-of- activity $ 65000 $ tf 48750 $ +A method 42500 22500 32500 202 Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense in year 1 (2022)? The highest amount in year 4 (2025)? The highest total amount over the 4-year period? T