Question

The following data relate to the Plant Assets account of Tamarisk Inc. at December 31, 2019:

		A			B			C			D
Original cost		$46,900			$51,850			$68,000			$73,000
Year purchased		2014			2015			2016			2017
Useful life		10	years		17,000	hours		15	years		10	years
Residual value		$4,800			$4,250			$8,000			$4,700
Depreciation method		straight-line			activity			straight-line			double-declining
Accumulated depreciation through 2019		$21,050			$28,100			$12,000			$26,280

Note: In the year an asset is purchased, Tamarisk does not record any depreciation expense on the asset. In the year an asset is retired or traded in, Tamarisk takes a full year’s depreciation on the asset.

The following transactions occurred during 2020:

1.

On May 5, Asset A was sold for $16,750 cash. The company’s bookkeeper recorded this retirement as follows:

Account Titles and Explanation	Debit	Credit
Cash	16,750
Asset A		16,750

2.		On December 31, it was determined that Asset B had been used 3,100 hours during 2020.
3.		On December 31, before calculating depreciation expense on Asset C, Tamarisk management decided that Asset C’s remaining useful life should be nine years as of year end.
4.		On December 31, it was discovered that a piece of equipment purchased in 2019 had been expensed completely in that year. The asset cost $35,000, had a useful life of 10 years when it was acquired, and had no residual value. Management has decided to use the double-declining-balance method for this asset, which can be referred to as “Asset E.” Ignore income taxes.

Prepare any necessary adjusting journal entries required at December 31, 2020, as well as any entries to record depreciation for 2020.

(To record depreciation on Asset A) (To record disposal of Asset A) (To record depreciation on Asset B) (To record cost of Asset E) (To record depreciation on Asset E) (To record depreciation on Asset D)

(To record depreciation on Asset C)

Answer 1