The Basrah Company acquired the following machines on July 5. 1995. Machine no. 100 101 102...

 

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The Basrah Company acquired the following machines on July 5. 1995. Machine no. 100 101 102 cost S 40000 15300 47500 Estimated salvage $8500 1300 2500 Service life 6 year 7 5 Jan. 2. 1996 purchased machine no. 103 for S 60000. Estimated service life 10 years. estimated salvage value S 5000. May 1. 1997 sold machine ( no.100 for S 23000 and replaced it with machine (no. 104). which was purchased for S 54000 and has an estimated salvage value of S 10800 at the end of eight years. Oct. 1. 1998 trading machine (ne. 102 for a new machine (no. 105) paying S 45000 in cash and receiving atrade-in allowance ( equal to market value ofS 16000 Machine ( no. 105 ) has an estimated life of 10 years and estimated salvage value of S 6000. Required: a) Compute and record depreciation on the machines for the years 1995. 1996. 1997. The company uses straight-fine method for all the machines except the machine (no. Joj J. it uses sum-of-years-digits. b) Prepare journal entries to record the sale of machine ( no.100) and the trade-in of machine ( no.102. show computations. The Basrah Company acquired the following machines on July 5. 1995. Machine no. 100 101 102 cost S 40000 15300 47500 Estimated salvage $8500 1300 2500 Service life 6 year 7 5 Jan. 2. 1996 purchased machine no. 103 for S 60000. Estimated service life 10 years. estimated salvage value S 5000. May 1. 1997 sold machine ( no.100 for S 23000 and replaced it with machine (no. 104). which was purchased for S 54000 and has an estimated salvage value of S 10800 at the end of eight years. Oct. 1. 1998 trading machine (ne. 102 for a new machine (no. 105) paying S 45000 in cash and receiving atrade-in allowance ( equal to market value ofS 16000 Machine ( no. 105 ) has an estimated life of 10 years and estimated salvage value of S 6000. Required: a) Compute and record depreciation on the machines for the years 1995. 1996. 1997. The company uses straight-fine method for all the machines except the machine (no. Joj J. it uses sum-of-years-digits. b) Prepare journal entries to record the sale of machine ( no.100) and the trade-in of machine ( no.102. show computations.

Answer rating: 100% (QA)

Step 1 Calculate Depreciation First lets calculate the annual depreciation using the straightline method and the sumofyearsdigits method Heres the calculation for each machine Machine 100 StraightLine ... View the full answer