Week9_ch8_solutions [Uploaded]

Week9_ch8_solutions [Uploaded] - FB2100 Accounting I...

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FB2100 – Accounting I – Semester A 2010 Solutions to Assigned Questions – Week 9 – Chapter 8 Exercise 8-9 (25 minutes) 1. Annual depreciation = $572,000 / 20 years = $28,600 per year Age of the building = Accumulated depreciation / Annual depreciation = $429,000 / $28,600 = 15 years 2. Entry to record the extraordinary repairs Building . ...................................................................... 68,350 Cash . ................................................................... 68,350 To record extraordinary repairs. 3. Cost of building Before repairs. ........................................................ $572,000 Add cost of repairs . ............................................... 68,350 $640,350 Less accumulated depreciation . ............................. 429,000 Revised book value of building . .............................. $211,350 4. Revised book value of building (part 3) . ................. $211,350 New estimate of useful life (20 - 15 + 7) . ................. 12 years Revised annual depreciation . .................................. $17,612.5 Journal entry Depreciation Expense* . ............................................. 17,612.5 Accumulated Depreciation–Building . ................. 17,612.5 To record depreciation. *Students may round this amount to 17,613, which is fine.
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FB2100 – Accounting I – Semester A 2010 Solutions to Assigned Questions – Week 9 – Chapter 8 Problem 8-6A (20 minutes) 1. Jan. 2 Machinery . .............................................................. 178,000 Cash . ................................................................. 178,000 To record machinery purchase. Jan. 3 Machinery . .............................................................. 2,840 Cash . ................................................................. 2,840 To record machinery costs. Jan. 3 Machinery . .............................................................. 1,160 Cash . ................................................................. 1,160 To record machinery costs. 2. a. First year Dec. 31 Depreciation Expense—Machinery . ..................... 28,000 Accumulated Depreciation—Machinery . ....... 28,000 To record depreciation [($182,000 - $14,000)/6]. b. Fifth year Dec. 31 Depreciation Expense—Machinery . ..................... 28,000 Accumulated Depreciation—Machinery . ....... 28,000 To record year’s depreciation. 3. Accumulated depreciation at the date of disposal Five years' depreciation (5 x $28,000) . ...................... $140,000 Book value at the date of disposal Original total cost . ...................................................... $182,000 Accumulated depreciation . ........................................ (140,000) Book value . ................................................................. $ 42,000 a. Sold for $15,000 cash Dec. 31 Cash . ...................................................................... 15,000 Loss on Sale of Machinery . ................................. 27,000 Accumulated Depreciation—Machinery . ............ 140,000
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This note was uploaded on 10/20/2011 for the course ACC fb200 taught by Professor Tony during the Spring '11 term at American University in Bulgaria.

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Week9_ch8_solutions [Uploaded] - FB2100 Accounting I...

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