The cash price of this machine was $48,000. Related expenditures included: sales tax $1,700, shipping costs $150, insurance during shipping $80, installation and testing costs $70, and $100 of oil and lubricants to be used with the machinery during its fi

Problem 10-3A

On January 1, 2014, Evers Company purchased the following two machines for use in its production process.

Machine A:		The cash price of this machine was $48,000. Related expenditures included: sales tax $1,700, shipping costs $150, insurance during shipping $80, installation and testing costs $70, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Evers estimates that the useful life of the machine is 5 years with a $5,000 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.
Machine B:		The recorded cost of this machine was $180,000. Evers estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period.

Prepare the following for Machine A. (Round answers to 0 decimal places, e.g. $2,125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

1.		The journal entry to record its purchase on January 1, 2014.
2.		The journal entry to record annual depreciation at December 31, 2014.

No.	Account Titles and Explanation	Debit	Credit
1.	[removed]	[removed]	[removed]
	[removed]	[removed]	[removed]
2.	[removed]	[removed]	[removed]
	[removed]	[removed]	[removed]

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Calculate the amount of depreciation expense that Evers should record for machine B each year of its useful life under the following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to 0 decimal places, e.g. $2,125.)

(1)		Evers uses the straight-line method of depreciation.
(2)		Evers uses the declining-balance method. The rate used is twice the straight-line rate.
(3)		Evers uses the units-of-activity method and estimates that the useful life of the machine is 125,000 units. Actual usage is as follows: 2014, 45,000 units; 2015, 35,000 units; 2016, 25,000 units; 2017, 20,000 units.

	2014	2015	2016	2017
Straight-line method	$[removed]	$[removed]	$[removed]	$[removed]
Declining-balance method	$[removed]	$[removed]	$[removed]	$[removed]
Units-of-activity method	$[removed]	$[removed]	$[removed]	$[removed]

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depreciation.xlsx