The December 31, 2017, adjusted trial balance of Maritime Manufacturing showed t

Question

The December 31, 2017, adjusted trial balance of Maritime Manufacturing showed the following information:

1Remaining useful life four years; estimated residual $40,000
2Remaining useful life five years; estimated residual $11,300

Early in 2018, the company made a decision to stop making the items produced by the machinery and buy the items instead. As a result, the remaining useful life was decreased to two years and the residual value was increased to a total of $80,000. At the beginning of 2018, it was determined that the estimated life of the office furniture should be reduced by two years and the residual value decreased by $6,500. The company calculates depreciation using the straight-line method to the nearest month.

Required:
Prepare the entries to record depreciation on the machinery and office furniture for the year ended December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round the final answer to the nearest whole dollars.)

1.Record the depreciation on the machinery, for the year ended Dec. 31, 2018.

2. Record the depreciation on the office furniture for the year ended Dec. 31, 2018.

  Machinery $ 400,000   Accumulated depreciation, machinery1 156,300   Office furniture 90,600   Accumulated depreciation, office furniture2 50,100

Explanation / Answer

Journal Entry for the year ended 31dec 2018 Date Detail Debit Credit 31.12.2018 Depreciation on Machinery $81,850.00 Depreciation on Furniture $11,900.00 To Accumulated depreciation on Machinery $81,850.00 To Accumulated depreciation on Furniture $11,900.00 Working Sheet for computation of depreciaiton on Machinery and Furniture for the period of 31st Dec 2018 Machinery Furniture Purchase Value $400,000.00 $90,600.00 Less: Accumated depreciation as on 31.12.17 $156,300.00 $50,100.00 Balance value as on 01.01.18 $243,700.00 $40,500.00 Original Remaining Useful life 4 year 5 year Revised Remaining Useful life 2 Years 3 Year Original Residual Value $40,000.00 $11,300.00 Revised Residual Value $80,000.00 $4,800.00 Depreciation per year during remaining period $81,850.00 $11,900.00 ( Balance Value-revised residual Value)/Revised remaining life) (243700-80000)/2 (40500-4800)/3

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