Question

Exercise 10-22 The following transactions occurred during 2020. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year. Jan. 30 A building that cost $190,080 in 2003 is torn down to make room for a new building. The wrecking contractor was paid $7,344 and was permitted to keep all materials salvaged. Mar. 10 Machinery that was purchased in 2013 for $23,040 is sold for $4,176 cash, f.o.b. purchaser’s plant. Freight of $432 is paid on the sale of this machinery. Mar. 20 A gear breaks on a machine that cost $12,960 in 2012. The gear is replaced at a cost of $2,880. The replacement does not extend the useful life of the machine but does make the machine more efficient. May 18 A special base installed for a machine in 2014 when the machine was purchased has to be replaced at a cost of $7,920 because of defective workmanship on the original base. The cost of the machinery was $20,448 in 2014. The cost of the base was $5,040, and this amount was charged to the Machinery account in 2014. June 23 One of the buildings is repainted at a cost of $9,936. It had not been painted since it was constructed in 2016.

Answer 1

• Date	Account Tittle & Explanatio	Debit($)	Credit($)
  30-Jan-17	Accumulated depreciation-Building	161,568
  	(190,080*5%*17)
  	Loss on disposal of building	35,856
  	Building		190,080
  	Cash		7,344
  10-Mar-17	Cash (4,176-432)	3,744
  	Accumulated depreciation-machinery	16,128
  	(23,040*10%*7)
  	Loss on disposal of machinery	3,168
  	Machinery		23,040
  20-Mar-17	Machinery	2,880
  	Cash		2,880
  18-May-17	Machinery	$7,920
  	Accumulated depreciation-Machinery (5,040*60%)	3,024
  	Loss on disposal of machinery	2,016
  	Machinery		5,040
  	Cash		7,920
  23-Jun-17	Maintenance & repairs expense	9,936
  	Cash		9,936