Beckman Enterprises follows a fiscal year that ends September 30, 2015. Beckman

Question

Beckman Enterprises follows a fiscal year that ends September 30, 2015. Beckman purchased a new processing machine on October 1, 2015 at a cost of $100,000. The asset is expected to have a salvage value of $20,000 at the end of its five-year useful life. If the asset is depreciated on the double-declining-balance method prepare the journal entries to record: 1) the purchase of the machine, 2) the adjusting entries to record depreciation at end of its first and second years in service, and give the machines book value and accumulated depreciation at the end of its second year in service.

Explanation / Answer

Solution.

1.

Machinery account debited $100,000

Bank/Cash account credited $100,000

2.

Depreciation expanse account debited $32,000

Accumulated depreciation account credited $32,000

( $100,000 - 20,000 = 80,000,80,000 * 40% = 32,000 )

3. Year 2nd

Depreciation expanse account debited $19,200

Accumulated depreciation account credited $19,200.

( $100,000 - 20,000 = 80,000,80,000 - 32,000 = 48,000 x 40% = 19,200)

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.