The following transactions occurred during 2020. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year. Jan. 30 Mar. 10 Mar. 20 May 18 June 23 A building that cost $198,000 in 2003 is torn down to make room for a new building. The wrecking contractor was paid $7,650 and was permitted to keep all materials salvaged. Machinery that was purchased in 2013 for $24,000 is sold for $4,350 cash, fo.b. purchaser's plant. Freight of $450 is paid on the sale of this machinery. A gear breaks on a machine that cost $13,500 in 2012. The gear is replaced at a cost of $3,000. The replacement does not extend the useful life of the machine but does make the machine more efficient. A special base installed for a machine in 2014 when the machine was purchased has to be replaced at a cost of $8,250 because of defective workmanship on the original base. The cost of the machinery was $21,300 in 2014. The cost of the base was $5,250, and this amount was charged to the Machinery account in 2014. One of the buildings is repainted at a cost of $10.350. It had not been painted since it was constructed in 2016. Prepare general journal entries for the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts)
The following transactions occurred during 2020. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year. Jan. 30 Mar. 10 Mar. 20 May 18 June 23 A building that cost $198,000 in 2003 is torn down to make room for a new building. The wrecking contractor was paid $7,650 and was permitted to keep all materials salvaged. Machinery that was purchased in 2013 for $24,000 is sold for $4,350 cash, fo.b. purchaser's plant. Freight of $450 is paid on the sale of this machinery. A gear breaks on a machine that cost $13,500 in 2012. The gear is replaced at a cost of $3,000. The replacement does not extend the useful life of the machine but does make the machine more efficient. A special base installed for a machine in 2014 when the machine was purchased has to be replaced at a cost of $8,250 because of defective workmanship on the original base. The cost of the machinery was $21,300 in 2014. The cost of the base was $5,250, and this amount was charged to the Machinery account in 2014. One of the buildings is repainted at a cost of $10.350. It had not been painted since it was constructed in 2016. Prepare general journal entries for the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts)
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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Transcribed Image Text:Date
1/30
3/10
Account Titles and Explanation
Debit
Credit
Transcribed Image Text:The following transactions occurred during 2020. Assume that depreciation of 10% per year is charged on all machinery and 5% per
year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets
acquired during the year, and no depreciation is charged on fixed assets disposed of during the year.
Jan. 30
Mar. 10
Mar. 20.
May 18
June 23
A building that cost $198,000 in 2003 is torn down to make room for a new building. The wrecking contractor was paid
$7,650 and was permitted to keep all materials salvaged.
Machinery that was purchased in 2013 for $24,000 is sold for $4,350 cash, fo.b. purchaser's plant. Freight of $450 is
paid on the sale of this machinery.
A gear breaks on a machine that cost $13,500 in 2012. The gear is replaced at a cost of $3,000. The replacement does
not extend the useful life of the machine but does make the machine more efficient.
A special base installed for a machine in 2014 when the machine was purchased has to be replaced at a cost of
$8,250 because of defective workmanship on the original base. The cost of the machinery was $21,300 in 2014. The
cost of the base was $5,250, and this amount was charged to the Machinery account in 2014.
One of the buildings is repainted at a cost of $10.350. It had not been painted since it was constructed in 2016.
Prepare general journal entries for the transactions. (Credit account titles are automatically indented when amount is entered. Do not
indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts)
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