h Rental Company purchased an apartment building early in 2024. There are 20 apartments in the building and each is furnished with major kitchen appliances. The company has decided to use the group depreciation method for the appliances. The following data are available: Appliance Cost Residual Value Service Life (in Years) Stoves $ 19,000 $ 4,000 6 Refrigerators 14,000 3,000 5 Dishwashers 12,000 2,000 4 In 2027, three new refrigerators costing $2,900 were purchased for cash. In that same year, the old refrigerators, which originally cost $1,900, were sold for $400. Required:

h Rental Company purchased an apartment building early in 2024. There are 20 apartments in the building and each is furnished with major kitchen appliances. The company has decided to use the group depreciation method for the appliances. The following data are available: Appliance Cost Residual Value Service Life (in Years) Stoves $ 19,000 $ 4,000 6 Refrigerators 14,000 3,000 5 Dishwashers 12,000 2,000 4 In 2027, three new refrigerators costing $2,900 were purchased for cash. In that same year, the old refrigerators, which originally cost $1,900, were sold for $400. Required:

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion

Section: Chapter Questions

Problem 38P

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Appliance	Cost	Residual Value	Service Life (in Years)
Stoves	$ 19,000	$ 4,000	6
Refrigerators	14,000	3,000	5
Dishwashers	12,000	2,000	4

Required:

Calculate the group depreciation rate, group life, and depreciation for 2024.
Prepare the journal entries to record the purchase of the new refrigerators and the sale of the old refrigerators.

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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