Question

Machinery purchased for $67,800 by Funland Co. in 2016 was originally estimated to have a life of 8 years with a salvage value of $4,520 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2021, it is determined that the total estimated life should be 10 years with a salvage value of $5,085 at the end of that time. Assume straight-line depreciation.

Prepare the entry to correct the prior years' depreciation, if necessary. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

  

Prepare the entry to record depreciation for 2021. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Use Machinery related account.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

List of Accounts

• Accumulated Depreciation-Buildings
• Accumulated Depreciation-Equipment
• Accumulated Depreciation-Machinery
• Accumulated Depreciation-Plant Assets
• Accumulated Depreciation-Trucks
• Buildings
• Cash
• Coal Mine
• Depreciation Expense
• Equipment
• Gain on Disposal of Machinery
• Inventory
• Investment Properties
• Loss on Disposal of Plant Assets
• Loss on Impairment
• Machinery
• Maintenance and Repairs Expense
• No Entry
• Paid-in Capital in Excess of Par - Common Stock
• Plant Assets
• Recovery of Loss from Impairment
• Retained Earnings
• Timber
• Trucks
• Unrealized Gain on Revaluation

Answer 1

Prepare the entry to correct the prior years' depreciation, if necessary. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
No Journal entry

  

Prepare the entry to record depreciation for 2021. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Use Machinery related account.)

Accumulated depreciation = (67800-4520/8*5) = 39550

Account Titles and Explanation	Debit	Credit
Depreciation expense (67800-39550-5085/5)	4633
Accumulated depreciation-Machine		4633