Use the following December 31,2017 information to answer the next 3 questions: C

Question

Use the following December 31,2017 information to answer the next 3 questions: Cost Useful life Salvage value Purchase date Depreciation Methood Machine A $20,000 7 years $ 1,100 Machine B $13,500 50,000 units $ 2,500 Machine C $10,800 5 years $ 2,500 Straight-line Units of Production Double-declining balan 1. What is the amount of accumulated depreciation for Machine A, on the December 31, 2017 balance sheet? A. $10,800 B. $10,125 D. E. $. &100. S.2100 2. Machine B produced 7,200 units during 2017. The book value associated with Machine B on December 31 2017 would be: A. $ 1,584 B. $ 792 C. 1,944 D. $11,916 E. $11,556 3. The journal entry to record depreciation of Machine C for 2017 would include: A. A credit to Accumulated Depreciation of $1,388 B. A debit to Depreciation Expense of S1,555 C. A debit to Accumulated Depreciation of S1,388 D. A credit to Depreciation Expense of $1,388 E. A debit to Accumulated Depreciation of $1,555

Explanation / Answer

1) Calculate accumlated dep :

Depreciation expense = (20000-1100)/7 = 2700 Per year

Accumlated dep on december 31,2017 = (2700*8/12)+(2700*3) = 9900

So answer is c) $9900

2) Calculate book value :

Depreciation expense = (13500-2500/50000) = 0.22 per unit

Depreciation expense for 2017 = 7200*.22 = 1584

Book value at the end of december 31,2017 = 13500-1584 = 11916

So answer is d) $11916

3) Journal entry :

So answer is a) A credit to accumlated depreciation of $1388

Date accounts & explanation debit credit Depreciation expense (3888-2500) 1388 Accumlated depreciation 1388

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