2004Jan. 1 Paid $106,600 cash plus $6,400 in sales tax for a new machine. The machine is estimatedto have a six-year life and a $9,800 salvage value.Dec. 31 Recorded annual straight-line depreciation on the machinery.2005Dec. 31 Due to new information obtained earlier in the year, the machine’s estimated useful life waschanged from six to four years, and the estimated salvage value was increased to $13,050.Recorded annual straight-line depreciation on the machinery.2006Dec. 31 Recorded annual straight-line depreciation on the machinery.Dec. 31 Sold the machine for $25,240 cash.RequiredPrepare journal entries to record these transactions and events.
2004 Jan. 1 Paid $106,600 cash plus $6,400 in sales tax for a new machine. The machine is estimated to have a six-year life and a $9,800 salvage value. Dr Machine $113,000 Cr Cash $113,000 Dec. 31 Recorded annual straight-line depreciation on the machinery. Dr Depreciation expense $17,200 Cr Accum depr $17,200 2005 Dec. 31 Due to new information obtained earlier in the year, the machine’s estimated useful life was changed from six to four years, and the estimated salvage value was increased to $13,050. At this point, your net book value was $95,800. The new useful life is 4 yrs, but 1 yr has passed already, so you have to depreciate this net book value less salvage value over 3 yrs. Recorded annual straight-line depreciation on the machinery. Dr Depr $27,583.33 Cr Accum depr $27,583.33 2006 Dec. 31 Recorded annual straight-line depreciation on the machinery. Dr Depr $27,583.33 Cr Accum depr $27,583.33 Dec. 31 Sold the machine for $25,240 cash Dr Accum depr $72,366.66 Dr Cash $25,240 Dr Loss on disposal of machine $15,393.34 Cr Machine $113,000
