Bridgeport Tool Corp. records depreciation annually at the end of the year. Its policy is to take a full year's depreciation on all assets that are used throughout the year and depreciation for half a year on all machines that are acquired or disposed of during the year. The depreciation rate for the machinery is 10%, applied on a straight-line basis, with no estimated scrap or residual value. The balance of the Machinery account at the beginning of 2020 was $172,300; the Accumulated Depreciation on Machinery account had a balance of $72,900. The machinery accounts were affected by the following transactions that occurred in 2020: Jan. 15 Machine no. 38, which cost $9,100 when it was acquired on June 3, 2013, was retired and sold as scrap metal for $600. Machine no. 81 was purchased. The fair value of this machine was $16,500. It replaced two machines, nos. 12 and 27, which were traded in on the new machine. Machine no. 12 was acquired on February 4, 2008, at a cost of $5,500 and Feb. 27 was still carried in the accounts, although it was fully depreciated and not in use. Machine no. 27 was acquired on June 11, 2013, at a cost of $8,200. In addition to these two used machines, Bridgeport paid $5,000 in cash. Machine no. 54 was equipped with electric controls at a cost of $940. This machine, originally equipped with simple hand controls, was purchased on December 11, 2016, for $1,800. The new electric controls can be attached to any one of several machines in the shop. Apr. 7 12 Machine no. 24 was repaired at a cost of $1,520 after a fire caused by a short circuit in the wiring burned out the motor and damaged certain essential parts. July 22 Machines 25, 26, and 41 were sold for $3,700 cash. The purchase dates and cost of these machines were as follows: No. 25 May 8, 2012 $4,000 No. 26 May 8, 2012 3,200 No. 41 June 1, 2014 2,800
Bridgeport Tool Corp. records depreciation annually at the end of the year. Its policy is to take a full year's depreciation on all assets that are used throughout the year and depreciation for half a year on all machines that are acquired or disposed of during the year. The depreciation rate for the machinery is 10%, applied on a straight-line basis, with no estimated scrap or residual value. The balance of the Machinery account at the beginning of 2020 was $172,300; the Accumulated Depreciation on Machinery account had a balance of $72,900. The machinery accounts were affected by the following transactions that occurred in 2020: Jan. 15 Machine no. 38, which cost $9,100 when it was acquired on June 3, 2013, was retired and sold as scrap metal for $600. Machine no. 81 was purchased. The fair value of this machine was $16,500. It replaced two machines, nos. 12 and 27, which were traded in on the new machine. Machine no. 12 was acquired on February 4, 2008, at a cost of $5,500 and Feb. 27 was still carried in the accounts, although it was fully depreciated and not in use. Machine no. 27 was acquired on June 11, 2013, at a cost of $8,200. In addition to these two used machines, Bridgeport paid $5,000 in cash. Machine no. 54 was equipped with electric controls at a cost of $940. This machine, originally equipped with simple hand controls, was purchased on December 11, 2016, for $1,800. The new electric controls can be attached to any one of several machines in the shop. Apr. 7 12 Machine no. 24 was repaired at a cost of $1,520 after a fire caused by a short circuit in the wiring burned out the motor and damaged certain essential parts. July 22 Machines 25, 26, and 41 were sold for $3,700 cash. The purchase dates and cost of these machines were as follows: No. 25 May 8, 2012 $4,000 No. 26 May 8, 2012 3,200 No. 41 June 1, 2014 2,800
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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In addition to the question in the pciture:
Calculate and record
Transcribed Image Text:Record each transaction in general journal form. (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 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
January
15
February
27
April 7
April 12
Transcribed Image Text:Bridgeport Tool Corp. records depreciation annually at the end of the year. Its policy is to take a full year's depreciation on all assets
that are used throughout the year and depreciation for half a year on all machines that are acquired or disposed of during the year. The
depreciation rate for the machinery is 10%, applied on a straight-line basis, with no estimated scrap or residual value.
The balance of the Machinery account at the beginning of 2020 was $172,300; the Accumulated Depreciation on Machinery account
had a balance of $72,900. The machinery accounts were affected by the following transactions that occurred in 2020:
Jan. 15
Machine no. 38, which cost $9,100 when it was acquired on June 3, 2013, was retired and sold as scrap metal for $600.
Machine no. 81 was purchased. The fair value of this machine was $16,500. It replaced two machines, nos. 12 and 27,
which were traded in on the new machine. Machine no. 12 was acquired on February 4, 2008, at a cost of $5,500 and
was still carried in the accounts, although it was fully depreciated and not in use. Machine no. 27 was acquired on June
11, 2013, at a cost of $8,200. In addition to these two used machines, Bridgeport paid $5,000 in cash.
Feb. 27
Machine no. 54 was equipped with electric controls at a cost of $940. This machine, originally equipped with simple
hand controls, was purchased on December 11, 2016, for $1,800. The new electric controls can be attached to any one
of several machines in the shop.
Apr. 7
Machine no. 24 was repaired at a cost of $1,520 after a fire caused by a short circuit in the wiring burned out the motor
and damaged certain essential parts.
12
July 22
Machines 25, 26, and 41 were sold for $3,700 cash. The purchase dates and cost of these machines were as follows:
No. 25
May 8, 2012
$4,000
No. 26
May 8, 2012
3,200
No. 41
June 1, 2014
2,800
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