The following data relate to the Machinery account of Eshkol, Inc. at December 3

Question

The following data relate to the Machinery account of Eshkol, Inc. at December 31, 2014.

                            Machinery

A

B

C

D

*In the year an asset is purchased, Eshkol, Inc. does not record any depreciation expense on the asset.

In the year an asset is retired or traded in, Eshkol, Inc. takes a full year’s depreciation on the asset.

The following transactions occurred during 2015.

Cash

25,870

    Machinery (Machine A)

25,870

Prepare the necessary correcting entries for the year 2015. 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 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 Record the original purchase of the machine.)

(To record depreciation.)

                            Machinery

A

B

C

D

Original cost $91,540 $101,490 $159,200 $159,200 Year purchased 2009 2010 2011 2013 Useful life 10 years 15,000 hours 15 years 10 years Salvage value $6,169 $5,970 $9,950 $9,950 Depreciation method Sum-of-the-years'-digits Activity Straight-line Double-declining balance Accum. depr through 2014* $62,088 $70,048 $29,850 $31,840

Explanation / Answer

Answer:(a)

Dep expense A/C Dr. $7761

     To Accu. Dep A/C                    $7761

Accumulated dep A/C Dr. $69849

    To Machinery A/C                      $65670

    To gain on disposal of machinery A/C   $4179

(b)

Dep expense A/C Dr. $26611.87

     To Accu. Dep A/C                    $26611.87

(c)

Dep expense A/C Dr. $23880

     To Accu. Dep A/C                    $23880

(d) MAchinery A/C Dr. $55720

         To retained earnings A/C           $55720

Dep expense A/C Dr. $11144

     To Accu. Dep A/C                    $11144

(a) Accumulated Depreciation-Machinery (A) (5/55*(91540-6169) 7761 Machinery (A) 91540-25870 65670 (b) Accumulated Depreciation-Machinery (B) [(101490-5970)/15000]*4179 26611.87 (c ) Accumulated Depreciation-Machinery (C) [(159200-29850-9950)/5] 23880 (d) Depreciation expense (55720*20%) 11144

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