Question

On July 1, 2019, Crane Company purchased new equipment for $90,000. Its estimated useful life was 7 years with a $13,000 salvage value. On January 1, 2022, before making its depreciation entry for 2022, the company estimated the remaining useful life to be 10 years beyond December 31, 2022. The new salvage value is estimated to be $5,000.

Prepare the journal entry to record depreciation on December 31, 2019. (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 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount SHOW LIST OF ACCOUNTS LINK TO TEXT

Prepare the journal entry to record depreciation on December 31, 2020. (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 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount SHOW LIST OF ACCOUNTS LINK TO TEXT

Compute the revised annual depreciation on December 31, 2022. Revised annual depreciation $Type your answer here SHOW LIST OF ACCOUNTS LINK TO TEXT

Prepare the journal entry to record depreciation on December 31, 2022. (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 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount SHOW LIST OF ACCOUNTS LINK TO TEXT

Compute the balance in Accumulated Depreciation—Equipment for this equipment after depreciation expense has been recorded on December 31, 2022. Accumulated Depreciation—Equipment $Type your answer here

Answer 1

1.

Account title and explanation	Debit	Credit
Depreciation expense ($90,000-13,000 / 7 * 6/12	$5,500
Accumulated depreciation		$5,500

2.

Account title and explanation	Debit	Credit
Depreciation expense ($90,000-13,000 / 7 )	$11,000
Accumulated depreciation		$11,000

3.

Revised annual depreciation = Book value of equipment - new salvage value / 10

Book value of equipment = $90,000 - 5,500 - 11,000 - 11,000 = $62,500

Revised annual depreciation = $62,500 - 5,000 / 10 = $5,750

4.

Account title and explanation	Debit	Credit
Depreciation expense	$5,750
Accumulated depreciation		$5,750

5.

Accumulated depreciation - Equipment = $5,500 + 11,000 + 11,000 + 5,750 = $33,250