Please help me solve this depreciation problem On September 1, 2019, Metlock Com
ID: 2593632 • Letter: P
Question
Please help me solve this depreciation problem
On September 1, 2019, Metlock Company purchased the following machine for use in its production process. The cash price of this machine was $49,500. Related expenditures included: sales tax $3,400, shipping costs $100, insurance during shipping $110, installation and testing costs $90, and $100 of oil and lubricants to be used with the machinery during its first year of operations, Metlock estimates that the useful life of the machine is 5 years with a $4,050 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. a.The journal entry to record its purchase on January 1, 2019 b.The journal entry to record annual depreciation at December 31, 2019 c. Prepare the depreciation schedule for Straight-line method. d. Prepare the depreciation schedule for Declining Balance method. C. Annual Depreciation DepreciationAccumulated Expense Cost Rate Depreciation Book Value 2017 2018 2019 2020 2021 2022Explanation / Answer
Date Account titles and explanation Debit Credit a. 2019 Jan. 1 Machinery 53200 Cash (Note:1) 53200 (Purchase of machinery) b. Dec.31 Depreciation expense 9830 Accumulated depreciation 9830 (Note:2) (Recorded depreciation expenses) Notes: 1. Cash price 49500 Sales tax 3400 Shipping cost 100 Insurance 110 Installation and testing 90 Total cost of machine 53200 2. Depreciation under straight line method=(Cost-Salvage value)/Useful life of the asset) Depreciation=(53200-4050)/5=9830 c. Year Cost Depreciation rate=(1/5)*100 Annual depreciation expense Accumulated depreciation Book value 1 2 3 (1-3) 2019 53200 20% 9830 9830 43370 2020 53200 20% 9830 19660 33540 2021 53200 20% 9830 29490 23710 2022 53200 20% 9830 39320 13880 2023 53200 20% 9830 49150 4050 d. Year Cost Depreciation rate=(1/5)*100 Annual depreciation expense Accumulated depreciation Book value 1 2 3 (1-3) 2019 53200 20% 10640 10640 42560 (53200*20%) 2020 53200 20% 8512 19152 34048 (42560*20%) 2021 53200 20% 6810 25962 27238 (34048*20%) 2022 53200 20% 5448 31409 21791 (27238*20%) 2023 53200 20% 4394 35803 17397 (21971*20%)