Mike Devereaux Company shows the following entries in its Equipment account for
ID: 2473776 • Letter: M
Question
Mike Devereaux Company shows the following entries in its Equipment account for 2015. All amounts are based on historical cost.
Equipment 2015 2015 Jan. 1 Balance 150,300 June 30 Cost of equipment sold Aug. 10 Purchases 41,600 (purchased prior to 2015) 23,900 12 Freight on equipment purchased 730 25 Installation costs 2,540 Nov. 10 Repairs 590
Prepare correcting entry if necessary. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS LINK TO TEXT
Assuming that depreciation is to be charged for a full year on the ending balance in the asset account, compute the proper depreciation charge for 2015 under each of the methods listed below. Assume an estimated life of 10 years, with no salvage value. The machinery included in the January 1, 2015, balance was purchased in 2013. (Round answers to 0 decimal places, e.g. 45,892.)
(1) Straight-line. $
(2) Sum-of-the-years'-digits. $
Explanation / Answer
Dr Cr Date Particulars Amt Date Particulars Amt 1-Jan Balance 150300 30-Jun Cost of equipment sold (purchased prior to 2015) 23900 10-Aug Purchases 41600 12-Aug Freight on Equipment purchased 730 25-Aug Installation cost 2540 Nv 10 Repairs 590 Dr Cr Maintanenece & Repairs Expenses 590 Equipment 590 (Being repair expenses wrongly charged to equipment cost) Jan 1 Balance 150300 Add: Purchases 41600 Freight on Equipment purchased 730 Installation cost 2540 44870 Less: Cost of equipment sold (purchased prior to 2015) -23900 31 December balance 219070 ans 1 Straight Line depreciation 219070/10 years 21907 $ Ans Ans 2 Sum of the year digit method 10+9+8+7+6+5+4+3+2+1 55 For equipment purchased in 2013 there will be depreciation deducted for 2 years Equipment (150300-23900) 126400 Depreciation 126400*8/55 18385.45 Purchase in this year 44870 Depreciatio 44870*10/55 8158.182 Total Depreciation 26544