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Equipment1 was purchased at the beginning of the year 2016 for $50,000 cash. No salvage/residual value....

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Accounting

Equipment1 was purchased at the beginning of the year 2016 for$50,000 cash. No salvage/residual value. Straight-line depreciationis used over a 10-year life.

Equipment2 was also purchased at the beginning of the year for550,000 (no salvage) 10 year life. We decided to use SL method. Theequipment2 required a $5,000 repair by year-end.

Equipment3 was purchased on 6/1 for 100,000 (20,000 salvagevalue)., 10 year life. We decided to use SYD as a depreciationmethod. At 12/31/2016 it required a capital improvements of $40,000which we signed a note to pay in 9 months.

Prepare Journal entries for all transactions

Answer & Explanation Solved by verified expert
4.2 Ratings (732 Votes)

Event Account Titles and Explanation Debit Credit
1 Equipment $50,000
Cash $50,000
(To record purchase of equipment)
2 Equipment $550,000
Cash $550,000
(To record purchase of equipment)
3 Equipment $100,000
Cash $100,000
(To record purchase of equipment)
4 Repair and Maintenance Expense $5,000
Cash $5,000
(To record repair and maintenance exp.)
5 Equipment $40,000
Note Payable $40,000
(To record capital improvement on assets)
6 Depreciation Expenses $68,485
Accumulated Depreciation $68,485
(To record depreciation expenses)
Working
Equipment - 1
Cost $50,000
Assets Life 10 Years
Depreciation per year $5,000
Equipment - 2
Cost $550,000
Assets Life 10 Years
Depreciation per year $55,000
Equipment - 3
Cost $100,000
Salvage Value $20,000
Depreciable cost $80,000
Assets Life 10 Years
Depreciation per year $8,485
($80,000 x 10/55 x 7/12)

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Transcribed Image Text

Equipment1 was purchased at the beginning of the year 2016 for$50,000 cash. No salvage/residual value. Straight-line depreciationis used over a 10-year life.Equipment2 was also purchased at the beginning of the year for550,000 (no salvage) 10 year life. We decided to use SL method. Theequipment2 required a $5,000 repair by year-end.Equipment3 was purchased on 6/1 for 100,000 (20,000 salvagevalue)., 10 year life. We decided to use SYD as a depreciationmethod. At 12/31/2016 it required a capital improvements of $40,000which we signed a note to pay in 9 months.Prepare Journal entries for all transactions

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