Required a. Prepare journal entries to record the acquisition costs. Description Debit ◆ b. Calculate the annual depreciation expense using straight-line depreciation and prepare a journal entry to record depreciation expense for 2016. Description Credit ♦ ♦ Description Debit Credit c. On December 31, 2019, Verdi sold the machine to another company for $14,000. Prepare the necessary journal entry to record the sale. Debit Credit

Required a. Prepare journal entries to record the acquisition costs. Description Debit ◆ b. Calculate the annual depreciation expense using straight-line depreciation and prepare a journal entry to record depreciation expense for 2016. Description Credit ♦ ♦ Description Debit Credit c. On December 31, 2019, Verdi sold the machine to another company for $14,000. Prepare the necessary journal entry to record the sale. Debit Credit

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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Question

Recording Asset Acquisition, Depreciation, and Disposal
On January 2, 2016, Verdi Company acquired a machine for $75,000. In addition to the purchase price, Verdi spent $2,100 for shipping and installation, and $2,600 to
calibrate the machine prior to use. The company estimates that the machine has a useful life of 5 years and a residual value of $11,000.
Required
a. Prepare journal entries to record the acquisition costs.
Description
Debit
+
→
b. Calculate the annual depreciation expense using straight-line depreciation and prepare a journal entry to record depreciation expense for 2016.
Description
Credit
Cash
◆
◆
Accumulated depreciation
c. On December 31, 2019, Verdi sold the machine to another company for $14,000. Prepare the necessary journal entry to record the sale.
Credit
Description
Debit
Credit
Debit
◆
♦

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Step 1: Introduction to straight-line method

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Step 2: a. Journal entry for recording the acquisition cost

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Step 3: b. Journal entry for recording the depreciation expense

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Step 4: c. Journal entry for recording the sale

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