Question

On January 1, 2016, Verlin Co. purchased new machinery for $300,000. The machinery has an estimated useful life of ten years, and depreciation is computed by the sum-of-the-years'-digits method. 20,000 Salvage. A) The accumulated depreciation on this machinery at December 31, 2017 is __________. Please prepare/show the journal entries for 12/31/2016; 12/31/2017; and 12/31/2018.

Answer 1

Ans.	Depreciable cost = Cost of machine - Salvage value
	$300,000 - $20,000 = $280,000
	Sum of year's digits = Number of years * (Number of years + 1) / 2
	10 * (10 + 1) / 2
	10 * 11 / 2
	110 / 2   =   55
Year	Depreciable cost	Remaining life	Depreciation	Depreciation
		of machine	fraction	expenses
2016	$280,000	10	10 / 55	$50,909.09
2017	$280,000	9	9 / 55	$45,818.18
2018	$280,000	8	8 / 55	$40,727.27
Ans. A	Accumulated depreciation on 2017 = Depreciation for 2016 + Depreciation for 2017
	$50,909.09 + $45,818.18
	$96,727.27
Ans. B
Date	Particulars	Debit	Credit
31-Dec-16	Depreciation expenses	$50,909.09
	Accumulated depreciation - Machine		$50,909.09
	(Depreciation expenses recorded in 2016)
31-Dec-17	Depreciation expenses	$45,818.18
	Accumulated depreciation - Machine		$45,818.18
	(Depreciation expenses recorded in 2017)
31-Dec-18	Depreciation expenses	$40,727.27
	Accumulated depreciation - Machine		$40,727.27
	(Depreciation expenses recorded in 2018)