Question

P8-3 (Algo) Computing the Acquisition Cost and Recording Depreciation under Three Alternative Methods LO8-2, 8-3

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At the beginning of the year, Plummer's Sports Center bought three used fitness machines from Brunswick Corporation. The machines immediately were overhauled, installed, and started operating. The machines were different; therefore, each had to be recorded separately in the accounts.

	Machine A		Machine B		Machine C
Invoice price paid for asset	$	20,500	$	34,400	$	22,500
Installation costs		2,200		1,400		1,300
Renovation costs prior to use		3,100		1,200		2,200

By the end of the first year, each machine had been operating 6,700 hours.

P8-3 Part 2

2. Prepare the entry to record depreciation expense at the end of Year 1, assuming the following. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

	ESTIMATES
Machine		Life	Residual Value		Depreciation Method
A		6 years	$2,400		Straight-line
B		67,000 hours	3,500		Units-of-production
C		10 years	3,500		Double-declining-balance

Journal entry worksheet

• Record the depreciation expense for year 1.

Note: Enter debits before credits.

	Transaction General Journal Debit Credit 1 Depreciation expense Accumulated depreciation

Answer 1