Question

Wardell Company purchased a mini computer on January 1, 2019, at a cost of $47,650. The computer has been depreciated using the straight-line method over an estimated five-year useful life with an estimated residual value of $4,900. On January 1, 2021, the estimate of useful life was changed to a total of 10 years, and the estimate of residual value was changed to $870.

Required:
1. Prepare the appropriate adjusting entry for depreciation in 2021 to reflect the revised estimate. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Prepare the appropriate adjusting entry for depreciation in 2021 to reflect the revised estimate, assuming that the company uses the sum-of-the-years'-digits method instead of the straight-line method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations and round your final answers to nearest whole dollar.)

Answer 1

1)

		date of purchase
cost of computer	47650	01.01.2019
residual value	4900
useful life	5
dep per year	8550
Bal as on 01.01.2019	47650
dep for year 2019	8550
dep for year 2020	8550
book value on 01.01.2021	30550
revised useful life	10	2 year already expries	remaining 8 years
revised residual life	870
revised dep	3710
Dep Dr	3710
TO Computer CR		3710

2)	cost of computer	47650
	residual value	4900
	useful life	5
			years	dep value	dep= years/total no of acculmated years	dep amount
	dep value	42750	5	42750	0.333333333	14250
	dep for year 2019	14250	4	42750	0.266666667	11400
	dep for year 2020	11400	3	42750	0.2	8550
	book value as on 01.01.2021	22000	2	42750	0.133333333	5700
	revised useful life	10	1	42750	0.066666667	2850
	revised residual life	870	15			42750
	dep value	21130
			years	dep value	dep= years/total no of acculmated years	dep amount
			8	21130	0.222222222	4695.556
			7	21130	0.194444444	4108.611
			6	21130	0.166666667	3521.667
			5	21130	0.138888889	2934.722
			4	21130	0.111111111	2347.778
			3	21130	0.083333333	1760.833
			2	21130	0.055555556	1173.889
			1	21130	0.027777778	586.9444
			36			21130
	Dep Dr	4695.556
	TO Computer CR		4695.555556