Question

Presented below is information related to Kingbird Manufacturing Corporation.

Asset		Cost		Estimated Salvage				Estimated Life (in years)
A		$46,100			$5,700				10
B		32,500			4,600				9
C		36,400			4,000				9
D		19,900			1,700				7
E		23,400			3,600				6

New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect.

Compute the rate of depreciation per year to be applied to the plant assets under the composite method. (Round answer to 2 decimal place, e.g. 4.83%.)

Composite rate

enter the composite rate in percentages rounded to 2 decimal places

%

eTextbook and Media

List of Accounts

  

  

New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is partially correct.

Prepare the adjusting entry necessary at the end of the year to record depreciation for the year. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Use Plant Assets related account.)

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

eTextbook and Media

List of Accounts

  

  

Partially correct answer iconYour answer is partially correct.

Prepare the entry to record the sale of asset D for cash of $4,500. It was used for 6 years, and depreciation was entered under the composite method. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Use Plant Assets related account.)

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
enter an account title	enter a debit amount	enter a credit amount

Answer 1

(a)-The rate of depreciation per year to be applied to the plant assets under the composite method

Asset	Cost	Estimated Salvage	Depreciable value	Estimated Life	Depreciation per year
A	46,100	5,700	40,400	10	4,040
B	32,500	4,600	27,900	9	3,100
C	36,400	4,000	32,400	9	3,600
D	19,900	1,700	18,200	7	2,600
E	23,400	3,600	19,800	6	3,300
TOTAL	158,300				16,640

Therefore, the Composite rate = [Total Depreciation Expense / Total Cost] x 100   

= [$16,640 / $158,300] x 100

= 10.51%

(b)-The journal entry at the end of the year to record depreciation for the year

Account Titles and Explanation	Debit ($)	Credit ($)
Depreciation Expense A/c	16,640
To Accumulated Depreciation A/c - Plant Assets		16,640
[Entry To record depreciation for the year]

(c)-Journal entry to record the sale of asset D for cash of $4,500

Account Titles and Explanation	Debit ($)	Credit ($)
Cash A/c	4,500
Accumulated Depreciation A/c - Plant Assets [$19,900 - $4,500]	15,400
To Plants Assets-D A/c		19,900
[Entry to record the sale of asset D for cash of $4,500]