At the beginning of the year, Young Company bought three used machines from Vinc

Question

At the beginning of the year, Young Company bought three used machines from Vince, Inc. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts. Machine A Machine B Machine C Amount paid for asset Installation costs Renovation costs prior to use Repairs after production began $7,650$25,700 650 1,250 360 250 1,600 410 $9,400 550 1.150 350 By the end of the first year, each machine had been operating 2,000 hours. 1. Compute the cost of each machine. Cost of Machine Machine A Machine B MachineCS 9,500 27,600 11,100 2. Prepar re the journal entry to re record depreciation expense at the end of year 1, assuming the following: Do not round intermediate calculations. If no entry is required for a transactionlevent, select "No Journal Entry Required" in the first account field.) Estimates Depreciation Method Straight-line Residual Value 5 years 10,000 hours 6 years S 200 600 900 Double-declining-balance TIP: Remember that the formula for double-declining-balance uses cost minus accumulated depreciation (not residual value). View transaction list View journal entry worksheet No T General Journal Debit Credit Depreciation Expense Accumulated Depreciation-Machine A Depreciation Machine B Machine C Accumulated Depreciation

Explanation / Answer

Journal entry :

Machine a dep = (9500-200)/5 = 1860

Machine B dep = (27600-600)/10000*2000 = 5400

Machine C dep :

Straight line rate = 100/6 = 16.67%

Double decline rate = 16.67*2 = 33.33%

first year dep = 11100*33.33% = 3700

date accounts & explanation debit credit Depreciation expenses a/c 10960       Accumlated depreciation- Machine A 1860       Accumlated depreciation- Machine B 5400       Accumlated depreciation- Machine C 3700 (To record depreciation expenses)

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