Problem 10-3A No. Account Titles and Explanation Debit Credit SHOW LIST OF ACCOU

Question

Problem 10-3A

No.

Account Titles and Explanation

Debit

Credit

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Depreciation Expense

2017

2018

2019

2020

Problem 10-3A

On January 1, 2017, Evers Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $48,000. Related expenditures included: sales tax $1,550, shipping costs $100, insurance during shipping $70, installation and testing costs $70, and $200 of oil and lubricants to be used with the machinery during its first year of operations. Evers estimates that the useful life of the machine is 5 years with a $4,950 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. Machine B: The recorded cost of this machine was $180,000. Evers estimates that the useful life of the machine is 4 years with a $10,150 salvage value remaining at the end of that time period. Your answer is correct. Prepare the following for Machine A. (Round answers to 0 decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
1. The journal entry to record its purchase on January 1, 2017. 2. The journal entry to record annual depreciation at December 31, 2017.

No.

Account Titles and Explanation

Debit

Credit

1.

2.

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Your answer is partially correct. Try again. Calculate the amount of depreciation expense that Evers should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to 0 decimal places, e.g. 2,125.)
(1) Evers uses the straight-line method of depreciation. (2) Evers uses the declining-balance method. The rate used is twice the straight-line rate. (3) Evers uses the units-of-activity method and estimates that the useful life of the machine is 97,500 units. Actual usage is as follows: 2017, 44,500 units; 2018, 29,500 units; 2019, 14,500 units; 2020, 9,000 units.

Depreciation Expense

2017

2018

2019

2020

Straight-line method $

$

$

$

Declining-balance method $

$

$

$

Units-of-activity method $

$

$

$

Explanation / Answer

Machine A:

workings:

Machine B;

straight line:

decling balance method:

schedule:

in the last year depreciatione expense is matched to arrive at the salvage value of machine.

each year depreciation will be:

units of activity method:

depreciation:

summary:

No Account Debit Credit 1 Machine 47800 oil and lubricants 200 Cash 48000 [Machinery purchased] 2 Depreciation expsense 8570 Accumulated depreciation - machinery 8570 [depreciation expense recorded for year 1]

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