At the beginning of the year, McCoy Company bought three used machines from Colt

Question

At the beginning of the year, McCoy Company bought three used machines from Colt, Inc. The machines immediately were overhauled, installed, and started operating. Because the machines were different, each was recorded separately in the accounts. By the end of the first year, each machine had been operating 8,000 hours. Give the journal entry to record depreciation expense at the end of year 1, assuming the following: (TIP: Remember that the formula for double-declining-balance uses cost minus accumulated depreciation (not residual value).) (Omit the "$" sign in your response.)

Explanation / Answer

Depreciation expense for machine A: (8400 – 500)/5 = $1580 Depreciation expense for machine B: (26,600 – 1,000)/40,000 hours = 0.665 per hour 8000 hours * 0.665 per hour = $5320 Depreciation expense for machine C: SL rate is 1/5 = 0.2. DDB rate is twice SL rate, DDB rate = 0.4; 7600 * 0.4 = $3040. Total depreciation expense = 1580 + 5320 + $3040 = $9940 Journal entry: Debit Depreciation expense 9940. Credit accumulated depreciation – machine A 1580. Credit accumulated depreciation - machine B 5320. Credit accumulatd depreciation – machine C 3040

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