(Analysis of Subsequent Expenditures) The following transactions occurred during 2017. Assume thatdepreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year.Jan. 30 A building that cost $132,000 in 2000 is torn down to make room for a new building. The wrecking contractor was paid $5,100 and was permitted to keep all materials salvaged.Mar. 10 Machinery that was purchased in 2010 for $16,000 is sold for $2,900 cash, f.o.b. purchaser’s plant. Freight of $300 is paid on the saleof this machinery.Mar. 20 A gear breaks on a machine that cost $9,000 in 2009. The gear is replaced at a cost of $2,000. The replacement does not extend theuseful life of the machine but does make the machine more effi cient.May 18 A special base installed for a machine in 2011 when the machine was purchased has to be replaced at a cost of $5,500 because of defective workmanship on the original base. The cost of the machinery was $14,200 in 2011. The cost of the base was $3,500, and this amount was charged to the Machinery account in 2011.June 23 One of the buildings is repainted at a cost of $6,900. It had not been painted since it was constructed in 2013.InstructionsPrepare general journal entries for the transactions. (Round to the nearest dollar.)
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
(Analysis of Subsequent Expenditures) The following transactions occurred during 2017. Assume thatdepreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value.
Jan. 30 A building that cost $132,000 in 2000 is torn down to make room for a new building. The wrecking contractor was paid $5,100 and was permitted to keep all materials salvaged.
Mar. 10 Machinery that was purchased in 2010 for $16,000 is sold for $2,900 cash, f.o.b. purchaser’s plant. Freight of $300 is paid on the sale
of this machinery.
Mar. 20 A gear breaks on a machine that cost $9,000 in 2009. The gear is replaced at a cost of $2,000. The replacement does not extend the
useful life of the machine but does make the machine more effi cient.
May 18 A special base installed for a machine in 2011 when the machine was purchased has to be replaced at a cost of $5,500 because of defective workmanship on the original base. The cost of the machinery was $14,200 in 2011. The cost of the base was $3,500, and this amount was charged to the Machinery account in 2011.
June 23 One of the buildings is repainted at a cost of $6,900. It had not been painted since it was constructed in 2013.
Instructions
Prepare general
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
