The following data relate to the Machinery account of Eshkol, Inc. at December 31, 2020. Aug. Machinery Aug.00AAug.00 Aug. Aug.0BAug.0 Aug. Aug.0CAug.0 Aug. Aug.000DAug.000 Original cost $46,000 $51,000 $80,000 $80,000 Year purchased 2015 2016 2017 2019 Useful life 10 years 15,000 hours 15 years 10 years Salvage value $ 3,100 $ 3,000 $ 5,000 $ 5,000 Depreciation method Sum-of-the-years’-digits Activity Straight-line Double-declining-balance Accum. depr. through 2020* $31,200 $35,200 $15,000 $16,000 *In the year an asset is purchased, Eshkol, Inc. does not record any depreciation expense on the asset. In the year an asset is retired or traded in, Eshkol, Inc. takes a full year’s depreciation on the asset. The following transactions occurred during 2021. a. On May 5, Machine A was sold for $13,000 cash. The company’s bookkeeper recorded this retirement in the following manner in the cash receipts journal. Cash 13,000 Machinery (Machine A) 13,000 b. On December 31, it was determined that Machine B had been used 2,100 hours during 2021. c. On December 31, before computing depreciation expense on Machine C, the management of Eshkol, Inc. decided the useful life remaining from January 1, 2021, was 10 years. d. On December 31, it was discovered that a machine purchased in 2020 had been expensed completely in that year. This machine cost $28,000 and has a useful life of 10 years and no salvage value. Management has decided to use the double-declining-balance method for this machine, which can be referred to as “Machine E.” Instructions Prepare the necessary correcting entries for the year 2021. Record the appropriate depreciation expense on the above-mentioned machines. No entry is necessary for Machine D.

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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The following data relate to the Machinery account of Eshkol, Inc. at December 31, 2020.

Aug.	Machinery
	Aug.00AAug.00	Aug.	Aug.0BAug.0	Aug.	Aug.0CAug.0	Aug.	Aug.000DAug.000
Original cost	$46,000	$51,000	$80,000	$80,000
Year purchased	2015	2016	2017	2019
Useful life	10 years	15,000 hours	15 years	10 years
Salvage value	$ 3,100	$ 3,000	$ 5,000	$ 5,000
Depreciation method	Sum-of-the-years’-digits	Activity	Straight-line	Double-declining-balance
Accum. depr. through 2020*	$31,200	$35,200	$15,000	$16,000
*In the year an asset is purchased, Eshkol, Inc. does not record any depreciation expense on the asset. In the year an asset is retired or traded in, Eshkol, Inc. takes a full year’s depreciation on the asset.

The following transactions occurred during 2021.

a. On May 5, Machine A was sold for $13,000 cash. The company’s bookkeeper recorded this retirement in the following manner in the cash receipts journal.

Cash	13,000
Machinery (Machine A)	13,000

b. On December 31, it was determined that Machine B had been used 2,100 hours during 2021.

c. On December 31, before computing depreciation expense on Machine C, the management of Eshkol, Inc. decided the useful life remaining from January 1, 2021, was 10 years.

d. On December 31, it was discovered that a machine purchased in 2020 had been expensed completely in that year. This machine cost $28,000 and has a useful life of 10 years and no salvage value. Management has decided to use the double-declining-balance method for this machine, which can be referred to as “Machine E.”

Instructions

Prepare the necessary correcting entries for the year 2021. Record the appropriate depreciation expense on the above-mentioned machines. No entry is necessary for Machine D.

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