Presented below is information related to Morrow Manufacturing Corporation. Asse

Question

Presented below is information related to Morrow Manufacturing Corporation.

Asset Cost Estimated Salvage Estimated Life (in years)
A $59,535 $8,085 10
B 49,392 7,056 9
C 52,920 5,292 8
D 27,930 2,205 7
E 34,545 3,675 6


(a) Compute the rate of depreciation per year to be applied to the plant assets under the composite method.



Composite life years ??????
Composite rate 10.98 %


(b) Prepare the adjusting entry necessary at the end of the year to record depreciation for the year.



Description/Account Debit Credit
Depreciation expense-Plant assets 24623
Accumulated depreciation-Plant assets 24623


(c) Prepare the entry to record the sale of fixed asset D for cash of $7,056. It was used for 6 years, and depreciation was entered under the composite method.



Description/Account Debit Credit
Accumulated depreciation-Plant assets 20874
Cash 7056
Plant assets 27930

Explanation / Answer

Acc Dep - Plant Asset

Cash

   Plant Assets

14200

4800

19000

10.68%

Asset Cost Estimated Salvage Dep Cost Estimated Life (in years) SL A $40,500 $5,500 $35,000 10 $3,500 B 33,600 4,800 $28,800 9 $3,200 C 36,000 3,600 $32,400 9 $3,600 D 19,000 1,500 $17,500 7 $2,500 E 23,500 2,500 $21,000 6 $3,500 $152,600 $134,700 $16,300

Acc Dep - Plant Asset

Cash

   Plant Assets

14200

4800

19000

10.68%

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