Question1 Machinery purchased for $67,800 by Sarasota Co. in 2013 was originally

Question

Question1 Machinery purchased for $67,800 by Sarasota Co. in 2013 was originally estimated to have a life of 8 years with a salvage value of $4,520 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2018, it is determined that the total estimated life should be 10 years with a salvage value of $5,085 at the end of that time. Assume straight-line depreciation. (a) Prepare the entry to correct the prior year's depreciation, if necessary. (If no entry is required, select "No entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Credit Attempts: 0 of 5 used SAVE FOR LATER SURMIT ANSWER

Explanation / Answer

Cost in whole in 2013 a $ 67,800 Salvage value b $    4,520 Depreciable value c = a-b $ 63,280 Depreciation per year d = c/8 $    7,910 Depreciation for 5 full years e = d*5 $ 39,550 Book value at the end of 5 years f = a-e $ 28,250 New useful life g $          10 Revised salvage value h $    5,085 New depreciatiable value I = f-h $ 23,165 New depreciation per year j = i/5 $    4,633 Debit depreciation expenses $        4,633 Credit Accum. Dep - Equipments $        4,633

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