Mike Devereaux Company shows the following entries in its Equipment account for 2021. All amounts are based on historical cost. Equipment 2021 2021 Jan. 1.1 Balance 134,750 June 30 cost of equipment sold Aug. 10 Purchases 32,000 (purchased prior to 2021) 23,000 Aug..12 Freight on equipment purchased 700 Aug..25 Installation costs 2,700 Nov. 10 Repairs 500 Instructions a. Prepare any correcting entries necessary. b. Assuming that depreciation is to be charged for a full year on the ending balance in the asset account, compute the proper depreciation charge for 2021 under each of the methods listed below. Assume an estimated life of 10 years, with no salvage value. The machinery included in the January 1, 2021, balance was purchased in 2019. 1. Straight-line. 2. Sum-of-the-years’-digits.
Mike Devereaux Company shows the following entries in its Equipment account for 2021. All amounts are based on historical cost. Equipment 2021 2021 Jan. 1.1 Balance 134,750 June 30 cost of equipment sold Aug. 10 Purchases 32,000 (purchased prior to 2021) 23,000 Aug..12 Freight on equipment purchased 700 Aug..25 Installation costs 2,700 Nov. 10 Repairs 500 Instructions a. Prepare any correcting entries necessary. b. Assuming that depreciation is to be charged for a full year on the ending balance in the asset account, compute the proper depreciation charge for 2021 under each of the methods listed below. Assume an estimated life of 10 years, with no salvage value. The machinery included in the January 1, 2021, balance was purchased in 2019. 1. Straight-line. 2. Sum-of-the-years’-digits.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Mike Devereaux Company shows the following entries in its Equipment account for 2021. All amounts are based on historical cost.
| Equipment | |||||
| 2021 | 2021 | ||||
| Jan. 1.1 | Balance |
134,750
|
June 30 | cost of equipment sold | |
| Aug. 10 | Purchases |
32,000
|
(purchased prior to 2021) |
23,000
|
|
| Aug..12 | Freight on equipment purchased |
700
|
|||
| Aug..25 | Installation costs |
2,700
|
|||
| Nov. 10 | Repairs |
500
|
Instructions
a. Prepare any correcting entries necessary.
b. Assuming that
1. Straight-line. 2. Sum-of-the-years’-digits.
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