Question

Machinery purchased for $67,800 by Sunland Co. in 2016 was originally estimated to have a life of 8 years with a salvage value of $4,520 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2021, it is determined that the total estimated life should be 10 years with a salvage value of $5,085 at the end of that time. Assume straight-line depreciation. Prepare the entry to correct the prior years' depreciation, if necessary. (If no entry is required, select "No entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit

Answer 1

Account Titles and Explanation	Debit	Credit
No entry	$ 0
No entry		$ 0
(No Entry required Since Correction is required for Upcoming Years )

Account Titles and Explanation	Debit	Credit
Depreciation Expesne	$ 4,633
Accumulated depreciation- machinery		$ 4,633
(To record the Depreciation Expense for 2021 )

Workings :
Depreciation Expense per Year          = (Cost (-) Salvage value ) / Useful Life          =   ( $ 67,800 (-) $ 4,520 )/ 8 Years	$ 7,910
Accumulated Depreciation for 5 Years             = $ 7,910 x 5 Years	$ 39,550
Book Value of Machinery           = Cost (-) Accumulated Depreciation           =    $ 67,800 (-) $ 39,550	$ 28,250
Remaining Useful Life              = 10 (-) 5 Years	5 Years
Depreciation Expense for next 5 Years          = (Cost (-) Salvage value ) / Useful Life          =   ( $ 28,250 (-) $ 5,085 )/ 5 Years	$ 4,633