Your answer is partially correct. Try again. Prepare the journal entries to reco
ID: 2562726 • Letter: Y
Question
Your answer is partially correct. Try again. Prepare the journal entries to record the transportation, installation, and improvement costs for each machine. (Credit account titles are automatically indented when the amount is entered. Do not indent manually Round percentage to 1 decimal place, for eg. 40.1 and Round answers to the nearest whole dollar, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Mar. 2 Other Operating E 5200 5200 Mar. 29 Repair and Mainte 6500 Cash 6500 LINK TO TEXT LINK TO TEXT Your answer is partially correct. Try again. Prepare the journal entry to record the depreciation expense to December 31, 2016, for each machine. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to the nearest whole dollar, e.g.S,275. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31 | Machinery 28920 Accumulated D 28920 Machinery Y Depr 89585 Accumulated 89585Explanation / Answer
1. Journal entry for recording the transportation & installement.
As per the accounting standards, all the costs incurred by the company for bringing the asset to its working condition its working condition for its intended use is required to be added in the cost of the asset and therefore will be capitalized. As such transportation cost will be added in the cost of asset on the basis of percentage of value of the asset.
Purchase price of both machines = $241,000
Catalogue Price = Machine X: $110,000 & Machine Y: $155,000
Total Catalogue Price = $265,000
Share of Machine X in percentage = $110,000 / $265,000 x 100 = 41.51% Approx.
Share of Machine Y in percentage = $155,000 / $265,000 x 100 = 58.49% Approx.
Price of Machine X in actual purchase price = $241,000 x 41.51% = 100,040 Approx.
Price of Machine Y in actual purchase price = $241,000 x 58.49% = $140,960Approx.
Transportation Cost on Machine X = $5,200 x 41.51% = $2,158 Approx.
Transportation Cost on Machine Y = $5,200 x 58.49% = $3042 Approx.
Journal Entry
Date
Account Head
Dr. Amount
Cr. Amount
March 24
Machine X
2,158
Machine Y
3,042
TO Cash
5,200
March 29
Machine Y
6,500
TO Cash
6,500
b. Calculation of Deprection:
Total Cost of Machine X = $100,040 + $2,158 = $102,198.
Type of Depreciation = Double declining method
Useful Life = 5 years
Under Double declining method, depreciation is charged at double the rates under straight line method. Any residual value given is ignored for under double declining method of depreciation.
Depreciation on Machine X till Dec 31 = $102,198 / 5 years x 2 x 9 months / 12 months = $30,660.
Total Cost of Machine Y = $140,960 + $3,042 + $6,500 = $150,502
Useful Life of Machine Y = 8 years
Residual Value = $15,200
Depreciable Amount = $150,502 - $15,200 = $135,302
Depreciation till Dec 31 on Machine Y = $135,302 / 8 years x 9 months / 12 months = $12,685 Approx.
Journal Entry
Date
Account Head
Dr. Amount
Cr. Amount
December 31
Depreciation on Machine X
30,660
Depreciation on Machine Y
12,685
Accumulated Depreciation on Machine X
30,660
Accumulated Depreciation on Machine Y
12,685
Note: The Depreciation amount may vary from the actual solution as I have taken depreciation for 9 months. The same may have been considered for half month as per the GDS propety classes table and method of depreciation.
Date
Account Head
Dr. Amount
Cr. Amount
March 24
Machine X
2,158
Machine Y
3,042
TO Cash
5,200
March 29
Machine Y
6,500
TO Cash
6,500
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