Problem 11-3 The following data relate to the Machinery account of Eshkol, Inc.
ID: 2479129 • Letter: P
Question
Problem 11-3
The following data relate to the Machinery account of Eshkol, Inc. at December 31, 2014.
Machinery
A
B
C
D
*In the year an asset is purchased, Eshkol, Inc. does not record any depreciation expense on the asset.
In the year an asset is retired or traded in, Eshkol, Inc. takes a full year’s depreciation on the asset.
The following transactions occurred during 2015.
Cash
30,940
Machinery (Machine A)
30,940
Prepare the necessary correcting entries for the year 2015. Record the appropriate depreciation expense on the above-mentioned machines. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 45,892. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No.
Account Titles and Explanation
Debit
Credit
(a)
(To record current depreciation.)
(To properly record the sale.)
(b)
(c)
(d)
(To Record the original purchase of the machine.)
(To record depreciation.)
Machinery
A
B
C
D
Original cost $109,480 $121,380 $190,400 $190,400 Year purchased 2009 2010 2011 2013 Useful life 10 years 15,000 hours 15 years 10 years Salvage value $7,378 $7,140 $11,900 $11,900 Depreciation method Sum-of-the-years'-digits Activity Straight-line Double-declining balance Accum. depr through 2014* $74,256 $83,776 $35,700 $38,080Explanation / Answer
(a)Depreciation-Machinery(A) Depreciation 9,282.00 = (5/55 x [$109,480 – $7,378]) Accumulated Dep. 9,282.00 9,282.00 (To record current year dep.) Machinery (A)= ($109,480 – $30,940) Accumulated Dep. 83,538.00 74256+9282 78,540.00 Machinery 78,540.00 Gain on disposal 4,998.00 (to record sale (b)Depreciation-Machinery (B) Depreciation 38,065.00 =([$121,380 – $7,140]÷ 15,000 x 4,998) Accumulated Dep. 9,282.00 =$38,065 (c)Depreciation-Machinery(C) Depreciation 14,280.00 =([$190,400 – $35,700 – $11,900]÷ 10) Accumulated Dep. 14,280.00 =$14,280 (d)Depreciation Expense Machinery 66,640.00 = ($66,640 x 0.20) Retained earning 66,640.00 =$13,328 (To Record the original purchase of the machine) Depreciation 9,576.00 Accumulated Dep. 9,576.00