Question

*need to check my answers: Question 1: Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $43,500. The machine’s useful life is estimated at 10 years, or 385,000 units of product, with a $5,000 salvage value. During its second year, the machine produces 32,500 units of product.

Determine the machine’s second-year depreciation under the:

A. Straight-line = my answer is $3850 just need to check

B. units of production= y answer is $3250

C. Assume that the machine was installed on March 1 of the current year.  
Using the straight-line method of depreciation, what would the first year depreciation expense be?

My answer is $3208

Question 2:

t December 31, 2019, Ingleton Company reports the following results for the year.

Cash sales: $1,025,000

Credit sales: $1,342,000

In addition, its unadjusted trial balance includes the following items.

Accounts Receivable $575,000 debit

Allowance for doubtful accounts $7,500 credit

Prepare the adjusting entry for Ingleton Co. to recognize bad debts under each of the following independent assumptions:

A) Bad debts are estimated to be 2.5% of credit sales. My answer is $33,550

B) Bad debts are estimated to be 1.5% of total sales. My answer is $35,505

C) An aging analysis estimates that 6% of year-end accounts receivable are uncollectible. My answer is $27,000

Answer 1

Calculation of depreciation in 2nd year
Straight Line Method
Original cost - scrap value	43500-5000	$    3,850.00
no. of years useful lfe of asset	10
Hence depreciation to be claimed in 2nd year will be $ 3850
Unit of Output method
Original cost - scrap value
Estimated output over the life of asset	43500-5000 x 32500	$    3,250.00
	385000
In case machinery installed on Mar 1 of current year
Depreciation expense will be
$3850 * 10/12	$                             3,208.33
(for 10 months)
Credit Sales	$1,342,000
Allowance for doubtful debts	$                          33,550.00
($1342000 @ 2.5%)
Bad debts account ………………Dr	$                          33,550.00
To Allowance for doubtful accounts		$ 33,550.00
Total Sales	$                    2,367,000.00
Allowance for doubtful debts	$                          35,505.00
([email protected]%)
Bad debts account ………………Dr	$                          35,505.00
To Allowance for doubtful accounts		$ 35,505.00
Year end account receivable	$575,000
Allowance for doubtful debts	$34,500
Allowance for doubtful debts	$7,500
(appearing in unadjusted trial balance)
Adjustment required	$27,000
Bad debts account ………………Dr	$27,000
To Allowance for doubtful accounts		$27,000