Waterway Company is in the process of preparing its financial statements for 2025. Assume that no entries for depreciation have been recorded in 2025. The following information related to depreciation of fixed assets is provided to you. 1. 2. 3. Waterway purchased equipment on January 2, 2022, for $79,400. At that time, the equipment had an estimated useful life of 10 years with a $5,400 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2025, as a result of additional information, the company determined that the equipment has a remaining useful life of 4 years with a $2,900 salvage value. During 2025, Waterway changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $300,000. It had a useful life of 10 years and a salvage value of $30,000. The following computations present depreciation on both bases for 2023 and 2024. Straight-line 2024 2023 $27,000 $27,000 Declining-balance 48,000 60,000 Waterway purchased a machine on July 1, 2023, at a cost of $120,000. The machine has a salvage value of $18,000 and a useful life of 8 years. Waterway's bookkeeper recorded straight-line depreciation in 2023 and 2024 but failed to consider the salvage value.
Waterway Company is in the process of preparing its financial statements for 2025. Assume that no entries for depreciation have been recorded in 2025. The following information related to depreciation of fixed assets is provided to you. 1. 2. 3. Waterway purchased equipment on January 2, 2022, for $79,400. At that time, the equipment had an estimated useful life of 10 years with a $5,400 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2025, as a result of additional information, the company determined that the equipment has a remaining useful life of 4 years with a $2,900 salvage value. During 2025, Waterway changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $300,000. It had a useful life of 10 years and a salvage value of $30,000. The following computations present depreciation on both bases for 2023 and 2024. Straight-line 2024 2023 $27,000 $27,000 Declining-balance 48,000 60,000 Waterway purchased a machine on July 1, 2023, at a cost of $120,000. The machine has a salvage value of $18,000 and a useful life of 8 years. Waterway's bookkeeper recorded straight-line depreciation in 2023 and 2024 but failed to consider the salvage value.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Ll.163.
Transcribed Image Text:Prepare the journal entries to record depreciation expense for 2025 and correct any errors made to date related to the
information provided. (Ignore taxes.) (Credit account titles are automatically indented when the amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit
entries.)
No. Account Titles and Explanation
1.
2.
3.
(To record current year depreciation.)
(To correct prior year depreciation.)
WATERWAY COMPANY
(Partial) Comparative Income Statements
For the Years 2025 and 2024
$
Debit
Show comparative net income for 2024 and 2025. Income before depreciation expense was $300,000 in 2025, and was
$340,000 in 2024. (Ignore taxes.)
$
2025
$
$
Credit
2024
¶
Transcribed Image Text:Waterway Company is in the process of preparing its financial statements for 2025. Assume that no entries for depreciation have
been recorded in 2025. The following information related to depreciation of fixed assets is provided to you.
1. Waterway purchased equipment on January 2, 2022, for $79,400. At that time, the equipment had an estimated useful life of
10 years with a $5,400 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2025, as a result of
additional information, the company determined that the equipment has a remaining useful life of 4 years with a $2,900
salvage value.
2.
3.
During 2025, Waterway changed from the double-declining-balance method for its building to the straight-line method. The
building originally cost $300,000. It had a useful life of 10 years and a salvage value of $30,000. The following computations
present depreciation on both bases for 2023 and 2024.
Straight-line
2024
2023
$27,000 $27,000
Declining-balance 48,000
60,000
Waterway purchased a machine on July 1, 2023, at a cost of $120,000. The machine has a salvage value of $18,000 and a
useful life of 8 years. Waterway's bookkeeper recorded straight-line depreciation in 2023 and 2024 but failed to consider the
salvage value.
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