Use the following information to answer Questions. On January 2, 2012, a company

Question

Use the following information to answer Questions. On January 2, 2012, a company purchases a machine for $11,000 and estimates that it will have a 10-year life and a residual value of $1,000. It is depreciating the machine for book purposes under the straight-line method. What is the journal entry to record depreciation for a manufacturing company that uses the machine entirely for the production of inventory? How is depreciation recorded for a manufacturer using the machine 70% for the production of inventory?

Explanation / Answer

a. depreciation expense 1000

To accumulated depreciation 1000

a. Inventory work in process OH 700

depreciation 300

To accumulated depreciation 1000.

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