Question

Help Save & Exit Sub Pete's Propellers Company showed the following information in its Property. Plant, and Equipment Subledger regarding Machine #5027 Machine #5027 Component Single metal housing Motor Blade Date of purchase Jan. 12/18 Jan. 12/18 Jan. 12/18 Depreciation Method" SL DDB Cost S60,000 39,000 15,600 $114,600 Est. Residual Est. Life $6,000 15 yrs 6,000 10 yrs 1,400 5 yrs *SL = Straight-line, DDB - Double-declining-balance On January 7, 2020, the machine blade cracked and it was replaced with a new one costing $13,000 purchased for cash (the old blade was scrapped). The new blade had an estimated residual value of $2,000 and an estimated life of five years and would continue to be depreciated using the straight-line method. During 2020, it was determined that the useful life on the metal housing should be increased to a total of 17 years instead of 15 years and that the residual value should be increased to $9.900. Required: 1. Prepare the entry to record the purchase of the replacement blade. View transaction list Journal entry worksheet 1

hello? can anyone help a brother out?

still stuck!:(

HELP

Answer 1

Solution:

(1) Journal Entries: (Amounts in $)

Date	Particulars	Debit	Credit
Jan 07 2020	Loss on Sale of Asset (Old Blade) A/c      Dr. Cash A/c                                                   Dr.       To Machine #5027 ( Old Blade) A/c (Being old blade scrapped)	8,520 1,400	9,920
Jan, 07 2020	Machine #5027 (New Blade) A/c           Dr.            To Cash A/c (Being new blade of Machine #5027 purchased)	13,000	13,000
Dec. 31, 2020	Profit & Loss A/c            Dr.       To Loss on Sale of the asset (Old Blade) A/c (Being loss on the sale of asset transferred to Profit & Loss A/c)	8,520	8,520

(2) Computation of Depreciation for the Year 2020:

Machine #5027 Components Date of Depreciation Purchase Method Estimated Cost! Remaining Residual Useful carrying value ($) Depreciation Carrying Depreciation expense for upto 2020 ($) Value ($) 2020 ($) Life (Yrs) Life (Yrs) Value ($) 15 7.200 52.800 Single Metal Housing Original Updated Motor Blade Old New Jan. 12/18 SL Jan. 07/20 SL Jan. 12/18 DDB 15 6,000 159,900 106,000 60,000 52,800 39,000 2,860 4,992 14,040 24,960 Jan. 12/18 SL Jan. 07/20 SL 5 5 1,400 2,000 15,600 5,680 9,920 13,000 13,000 Depreciation for the year 2020 Par 2020 I 2,200 10,052

Depreciation expense for the year is $ 10,052.