Answered: The total depreciation for the year…

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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In the audit of the books of Yellow Corporation for the year 2020, the following items and information appeared in the Production Machine account of the client: Date Particulars Debit Credit 01/01 Balance–Machine 1, 2, 3, and 4 at P180,000 each P 720,000 02/28 Machine 5 Machine 1 396,000 P 6,000 09/01 Machine 6 192,000 12/01 Machine 7 432,000 The Accumulated Depreciation account contained no entries for the year 2020. The balance on January 1, 2020 per your audit, was as follows: Machine 1 P168,750 Machine 2 78,750 Machine 3 67,500 Machine 4 45,000 Based on your further inquiry and verification, you noted the following: 1. Machine 5 was purchased for cash; it replaced Machine 1, which was sold on this date for P6,000. 2. Machine 2 was destroyed by the thickness of engine oil used leading to explosion on December 1, 2020. Machine 7 was to replace Machine 2. 3. Machine 3 was traded in for Machine 6 at an allowance of P24,000; the difference was paid in cash and charged to Production Machine account. 4. Depreciation rate is recognized at 25% per annum Questions: 4. The total depreciation for the year ended December 31, 2020 is 5. The carrying amount of production machine as of December 31, 2020 is

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