The following transactions were completed by SloMo Company during a 3-year period. All transactions are related to the use of fixed assets. The double-declining method of depreciation is used. Year 1: Jan. 3 Oct. 2 Dec. 31 Year 2: Feb. 6 Mar. 31 Nov. 2 Dec. 31 Year 3: Jun. 1 Nov. 2 Dec. 31 Bought a used piece of manufacturing equipment for $30,000. Paid cash for the equipment. Paid a repair company $725 for maintenance and repairs to the equipment. Recorded depreciation on the equipment for the year. The estimated useful life of the equipment is 5 years, with a residual value of $5,000. Bought a new piece of manufacturing equipment for $60,000. Paid cash for the equipment. Sold the used piece of manufacturing equipment for $15,000. (Record depreciation to date in Year 2 for the equipment.) Paid the repair company $250 for repairs to the equipment. Record depreciation for the new manufacturing equipment. It has an estimated residual value of $10,000 and a useful life of 5 years. Bought a new piece of manufacturing equipment for $75,000. Paid cash for the equipment. Sold the manufacturing equipment purchased Feb. 6, Year 2 for $49,000. (Record depreciation to date in Year 3 for the equipment.) Record depreciation on the remaining manufacturing equipment purchased on June 1. It has an estimated residual value of $15,000 and an estimted useful life of 4 years. Instructions: Journalize the above transactions. Round to the nearest dollar.
The following transactions were completed by SloMo Company during a 3-year period. All transactions are related to the use of fixed assets. The double-declining method of depreciation is used. Year 1: Jan. 3 Oct. 2 Dec. 31 Year 2: Feb. 6 Mar. 31 Nov. 2 Dec. 31 Year 3: Jun. 1 Nov. 2 Dec. 31 Bought a used piece of manufacturing equipment for $30,000. Paid cash for the equipment. Paid a repair company $725 for maintenance and repairs to the equipment. Recorded depreciation on the equipment for the year. The estimated useful life of the equipment is 5 years, with a residual value of $5,000. Bought a new piece of manufacturing equipment for $60,000. Paid cash for the equipment. Sold the used piece of manufacturing equipment for $15,000. (Record depreciation to date in Year 2 for the equipment.) Paid the repair company $250 for repairs to the equipment. Record depreciation for the new manufacturing equipment. It has an estimated residual value of $10,000 and a useful life of 5 years. Bought a new piece of manufacturing equipment for $75,000. Paid cash for the equipment. Sold the manufacturing equipment purchased Feb. 6, Year 2 for $49,000. (Record depreciation to date in Year 3 for the equipment.) Record depreciation on the remaining manufacturing equipment purchased on June 1. It has an estimated residual value of $15,000 and an estimted useful life of 4 years. Instructions: Journalize the above transactions. Round to the nearest dollar.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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:The following transactions were completed by SloMo Company during a 3-year period. All transactions are
related to the use of fixed assets. The double-declining method of depreciation is used.
Year 1:
Jan. 3
Oct. 2
Dec. 31
Year 2:
Feb. 6
Mar. 31
Nov. 2
Dec. 31
Year 3:
Jun. 1
Nov. 2
Dec. 31
Bought a used piece of manufacturing equipment for $30,000. Paid cash for the equipment.
Paid a repair company $725 for maintenance and repairs to the equipment.
Recorded depreciation on the equipment for the year. The estimated useful life of the
equipment is 5 years, with a residual value of $5,000.
Bought a new piece of manufacturing equipment for $60,000. Paid cash for the equipment.
Sold the used piece of manufacturing equipment for $15,000. (Record depreciation to date
in Year 2 for the equipment.)
Paid the repair company $250 for repairs to the equipment.
Record depreciation for the new manufacturing equipment. It has an estimated residual value of
$10,000 and a useful life of 5 years.
Bought a new piece of manufacturing equipment for $75,000. Paid cash for the equipment.
Sold the manufacturing equipment purchased Feb. 6, Year 2 for $49,000. (Record depreciation to
date in Year 3 for the equipment.)
Record depreciation on the remaining manufacturing equipment purchased on June 1. It has
an estimated residual value of $15,000 and an estimted useful life of 4 years.
Instructions:
Journalize the above transactions. Round to the nearest dollar.
Expert Solution
Step 1
Depreciation refers to the amount that is charged by the company on the fixed assets by which the asset value decreases with its usage throughout its useful life. Under the double declining method, the depreciation will be chared at double of straight line method.
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