The following transactions occurred during 2021. (a) On May 5, Machine A was sold for $15,340 cash.
Question:
The following transactions occurred during 2021.
| (a) | On May 5, Machine A was sold for $15,340 cash. The company’s bookkeeper recorded this retirement in the following manner in the cash receipts journal. | ||
Cash | 15,340 | ||
Machinery (Machine A) | 15,340 |
| (b) | On December 31, it was determined that Machine B had been used 2,500 hours during 2021. | ||
| (c) | On December 31, before computing depreciation expense on Machine C, the management of Wildhorse, Inc. decided the useful life remaining from January 1, 2021, was 10 years. | ||
| (d) | On December 31, it was discovered that a machine purchased in 2020 had been expensed completely in that year. This machine cost $33,040 and has a useful life of 10 years and no salvage value. Management has decided to use the double-declining-balance method for this machine, which can be referred to as “Machine E.” | ||
Machinery | ||||||||
A | B | C | D | |||||
| Original cost | $54,280 | $60,180 | $94,400 | $94,400 | ||||
| Year purchased | 2015 | 2016 | 2017 | 2019 | ||||
| Useful life | 10 years | 15,000 hours | 15 years | 10 years | ||||
| Salvage value | $3,658 | $3,540 | $5,900 | $5,900 | ||||
| Depreciation method | Sum-of-the-years'-digits | Activity | Straight-line | Double-declining balance | ||||
| Accum. depr through 2020* | $36,816 | $41,536 | $17,700 | $18,880 | ||||
*In the year an asset is purchased, Wildhorse, Inc. does not record any depreciation expense on the asset.
In the year an asset is retired or traded in, Wildhorse, Inc. takes a full year’s depreciation on the asset.
Prepare the necessary correcting entries for the year 2021. Record the appropriate depreciation expense on the above-mentioned machines. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round intermediate calculations to 3 decimal places, e.g. 4.589 and final answers to 0 decimal places, e.g. 45,892. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No. | Account Titles and Explanation | Debit | Credit |
(a) | |||
(To record current depreciation) | |||
(To properly record the sale) | |||
(b) | |||
(c) | |||
(d) | |||
(To correct the incorrect expensing of the asset in 2020) | |||
(To record depreciation) |
Expert Answer:
Answer Solution No Particulars Debit Credit a Depreciation expense 4602 Accumul... View the full answer
