At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts. Machine AMachine BMachine CCost of the asset$9,600 $38,800 $22,600 Installation costs 850 2,700 1,800 Renovation costs prior to use 650 2,300 2,800 Repairs after production began 700 700 1,300 By the end of the first year, each machine had been operating 8,000 hours. Required:Compute the cost of each machine.Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following: Estimates MachineLifeResidual ValueDepreciation MethodA5years $1,600 Straight-lineB20,000hours 1,200 Units-of-productionC10years 2,000 Double-declining-balance Journal entry worksheet1Record the depreciation expense for the three used machines at the end ofyear 1.Note: Enter debits before credits.TransactionGeneral JournalDebitCredit1 Required 1Required 2Required 3Compute the cost of each machine.Cost ofMachineMachine AMachine BMachine C

There are various techniques to report the depreciation expense in the accounting books. These…

Answered: At the beginning of the year, Grillo…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts.

	Machine A	Machine B	Machine C
Cost of the asset	$	9,600		$	38,800	$	22,600
Installation costs		850			2,700		1,800
Renovation costs prior to use		650			2,300		2,800
Repairs after production began		700			700		1,300

By the end of the first year, each machine had been operating 8,000 hours.

Required:

Compute the cost of each machine.
Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following:

	Estimates
Machine	Life	Residual Value	Depreciation Method
A	5	years		$	1,600	Straight-line
B	20,000	hours			1,200	Units-of-production
C	10	years			2,000	Double-declining-balance

Journal entry worksheet
1
Record the depreciation expense for the three used machines at the end of
year 1.
Note: Enter debits before credits.
Transaction
General Journal
Debit
Credit
1

Required 1
Required 2
Required 3
Compute the cost of each machine.
Cost of
Machine
Machine A
Machine B
Machine C

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