Question 1 [8 points]

The December 31, 2015, adjusted trial balance of Allarco Inc. showed the following information:

Question 1 [8 points] The December 31, 2015, adjusted trial balance of Allarco Inc. showed the following information: Machinery $699,000 Accumulated depreciation, machinery! 305,000 Office furniture 112,000 Accumulated depreciation, office furniture? 62,000 "Remaining useful life 8 years; estimated residual $110,000 2 Remaining useful life 5 years; estimated residual $10,000 Early in 2016, Allarco Inc. made a decision to stop making the items produced by the machinery and buy the items instead. As a result, the remaining useful life was decreased to 4 years and the residual value was increased a total of $160,000. At the beginning of 2016, it was determined that the estimated life of the office furniture should be reduced by 1 year and the residual value decreased by $5,000. Allarco Inc. calculates depreciation using the straight-line method to the nearest month. Prepare the entries to record depreciation on the machinery and office furniture for the year ended December 31, 2016. Enter an appropriate description when entering the transactions in the journal. Dates must be entered in the format dd/mmm (ie. January 15 would be 15/Jan). For each journal entry, indicate how each account affects the balance sheet (Assets, Liabilities, Equity). Use + for increase and - for decrease. For example, if an account decreases equity. choose '-Equity General Journal Page Gj1 Effect On Date Account/Explanation F Debi Credit Balance Sheet