Beta Inc. acquired a machine on January 1, 2010 for $46,000. Beta paid $14,000 c

Question

Beta Inc. acquired a machine on January 1, 2010 for $46,000. Beta paid $14,000 cash and signed a note for the balance. On January 3, it paid $1,100 freight costs for delivery of the machine. On January 5, Beta paid $1,200 to have the machine installed. On December 30, Beta paid $400 for annual maintenance on the machine. On December 31, Beta recorded depreciation using the straight-line method. Beta expects to use the machine for 5 years at which time it expects a residual value of $2,500. Prepare the journal entry to record depreciation on December 31, 2010. (Omit the "$" sign in your response.)

Explanation / Answer

First we need to calculate the cost of machine

Purchase price                              $46,000

Delivery cost                                      1,100

Installation cost                                 1,200

Total cost of machine                 $48,300

(Repair and maintenance is an expense)

Depreciation = (48,300 – 2,500) / 5 = $9,160

Journal Entry

Depreciation expense

$9,160

To Accumulated depreciation

$9,160

First we need to calculate the cost of machine

Purchase price                              $46,000

Delivery cost                                      1,100

Installation cost                                 1,200

Total cost of machine                 $48,300

(Repair and maintenance is an expense)

Depreciation = (48,300 – 2,500) / 5 = $9,160

Journal Entry

Depreciation expense

$9,160

To Accumulated depreciation

$9,160

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