On July 1, 2019, Cullumber Company purchased new equipment for $85,000. Its estimated useful life was 5 years with a $12,000 salvage value. On December 31, 2022, the company estimated that the equipment’s remaining useful life was 10 years, with a revised salvage value of $5,000.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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On July 1, 2019, Cullumber Company purchased new equipment for $85,000. Its estimated useful life was 5 years with a $12,000 salvage value. On December 31, 2022, the company estimated that the equipment’s remaining useful life was 10 years, with a revised salvage value of $5,000.

 

Prepare the journal entry to record depreciation on December 31, 2019

Account Titles and Explanation
Debit
Credit
Depreciation Expense
7300  
Accumulated Depreciation - Equipment
  7300

 

Prepare the journal entry to record depreciation on December 31, 2020.

 
Account Titles and Explanation
Debit
Credit
Depreciation Expense
14600
 
Accumulate Depreciation - Equipment
  14600

- Compute the revised annual depreciation on December 31, 2022.

- Prepare the journal entry to record depreciation on December 31, 2022

- Compute the balance in Accumulated Depreciation—Equipment for this equipment after depreciation expense has been recorded on December 31, 2022.

 

 

 

 

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