Question

6. The Sewing Machines that Mary Ann contributed to her partnership with Ginger had a market value of $25,000 and were expected to be used for 50,000 fittings (no salvage). Show your calculation of depreciation expense per unit below.

A. Prepare below the journal entry to record depreciation expense for Year One using the units-of-production method if there were 3,000 fittings during the first year.

Account Debit Credit

B. Prepare below the journal entry to record depreciation expense for Year Two using the units-of-production method if there were 3,500 fittings during the second year.

Account Debit Credit

C. What is the book value of the Sewing Machines after Year Two? Show your work below.

Answer 1

a)

Date	Title	Debit	Credit
	Depreciation expense ($25,000/50,000*3,000)	$ 1,500
	Accumulated depreciation - Sewing machine		$ 1,500
	(To record depreciation expense for 1st year)

b)

Date	Title	Debit	Credit
	Depreciation expense ($25,000/50,000*3,500)	$ 1,750
	Accumulated depreciation - Sewing machine		$ 1,750
	(To record depreciation expense for 2nd year)

c)

Cost of machine	$ 25,000
Less: Depreciation expense for 1st year	$ (1,500)
Less: Depreciation expense for 2nd year	$ (1,750)
Book value after 2nd year	$ 21,750

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