50.1K

Verified Solution

Link Copied!

On January $1,2022,$ Cullumber Company purchased the following two machines for use in its production process.

Machine A: The cash price of this machine was $$37,000.$ Related expenditures also paid in cash included: sales tax $$1,500,$

shipping costs $$100,$ insurance during shipping $$50,$ installation and testing costs $$50,$ and $$100$ of oil and

lubricants to be used with the machinery during its first year of operations. Cullumber estimates that the useful life

of the machine is $5$ years with a $$4,000$ 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.$ Cullumber estimates that the useful life of the machine is $4$ years

with a $$10,500$ salvage value remaining at the end of that time period. Prepare the following for Machine A$.($Round answers to O decimal places, e g$.5,125.$ List all debit entries before credit entries. 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.$)$

The journal entry to record its purchase on January $1,2022.$

The journal entry to record annual depreciation at December $31,2022.$

Debit

Credit Prepare the following for Machine A$.($Round answers to O decimal places, e g$.5,125.$ List all debit entries before credit entries. 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.$)$

The journal entry to record its purchase on January $1,2022.$

The journal entry to record annual depreciation at December $31,2022.$

Debit

Credit Calculate the amount of depreciation expense that Whispering Winds should record for Machine B each year of its useful life

under the following assumptions. $($Round depreciation cost per unit to $2$ decimal places, eg$.12\mathrm{.}25.$ Round final answers to $0$ decimal

places, eg$.2,125.)$

$(1)$ Whispering Winds uses the straight$-$line method of depreciation.

$(2)$ Whispering Winds uses the declining$-$balance method. The rate used is twice the straight$-$line rate.

$(3)$ Whispering Winds uses the units$-$of$-$activity method and estimates that the useful life of the machine is $97,000$ units.

Actual usage is as follows: $2022,38,000$ units; $2023,28,000$ units; $2024,18,000$ units; $2025,13,000$ units.

Depreciation Expense Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense in year $1(2022)?$

The highest amount in vear $4(2025)?$

The highest total amount over the $4-$year period?

eTextbook and Media

List of Accounts Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense in year $1(2022)?$

The highest amount in vear $4(2025)?$

The highest total amount over the $4-$year period?

eTextbook and Media

List of Accounts

Show all imagesShow all images

Answer & Explanation Solved by verified expert

See Answer