23 n March 31, 2013, the Herzog Company purchased a factory complete with machin

Question

23 n March 31, 2013, the Herzog Company purchased a factory complete with machinery and quipment e allocation of the total purchase price of $920,000 to the various types of assets along wit estimated useful lives and residual values are as follows: Estimated Residual Value Asset Land Building420,000 none Machinery 220000 10% of cost Equipment 140,000 $14,000 Estimated Useful Life in Years NIA 25 Cost $140,000N/A Total $920,000 On June 29, 2014, machinery included in the March 31. 2013, purchase that cost $92,000 was sold for $72.000 Herzog uses the straight-line depreciation method for buildings and machinery and the sum-of the-years' -digits method for equipment. Partial-year depreciation is calculated based on the number of months an asset is in service Required: Compute depreciation expense on the building, machinery and equipment for 2013, (Do not round Depreciation expense 800 6 Building Machinery Equipme

Explanation / Answer

Entry to record

Dr Depreciation expense 4,488
Cr Accumulated depreciation--Machinery 4,488

$92,000 - ($92,000 x 10%)] / 6years = $13,800
$13,800 x 6/12 = $ 6,900

The sale of machinery on MArch 31, 2013
Dr Cash 72,000
Dr Accumulated depreciation--Machinery 17,250***
Dr Loss on sale of machinery 2,750
Cr Machinery 92,000

***$13,800 x 9/12 = $10,350
$13,800 x 6/12 = $6,900
Total $17,250

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