Question

*Exercise 22-11 Crane Co. purchased a machine on January 1, 2018, for $588,500. At that time, it was estimated that the machine would have a 10-year life and no salvage value. On December 31, 2021, the firm's accountant found that the entry for depreciation expense had been omitted in 2019. In addition, management has informed the accountant that the company plans to switch to straight-line depreciation, starting with the year 2021. At present, the company uses the sum-of-the-years'-digits method for depreciating equipment. Prepare the general journal entries that should be made at December 31, 2021, to record these events. (Ignore tax effects.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Debit Credit Date Account Titles and Explanation Dec. 31, 2021 (To correct for the omission of depreciation expense in 2019.) Dec. 31, 2021 (To record depreciation expense for 2021.) Question Attempts: Unlimited

Answer 1

Depreciation expense per year = (588500/10) = 58850

Accumulated depreciation (2018 to 2020) = 58850*3 = 176550

2021 Depreciation expense = (588500-176550)*7/28 = 102987.50

Date	account title and explanation	Debit	Credit
Dec 31,2021	Retained earnings	58850
	Accumulated depreciation-Machine		58850
	(To correct for the omission of depreciation expense in 2019)
Dec 31,2021	Depreciation expense	102988
	Accumulated depreciation-machine		102988
	(To record depreciation expense for 2021)