Question

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. What journal entry would be needed to record the machines' first year depreciation under the units-of-production method?

Answer 1

Answer:

depreciation expense = $25800 debit

accumulated depreciation = $25800 credit

Explanation:

given data

beginning of the year cost = $135,000

useful life = 5 years

product = 300,000 units

salvage value = $15,000

1st year machine produce =  64,500 units

to find out

machines first year depreciation

solution

we get here machines first year depreciation that is express as

machines depreciation = ( depreciation base ÷ estimate unit produce ) × no of unit produce in 1st year   ...................1

put here value we get

machines depreciation = $\frac{135000-15000}{300000}$ × 64500

machines depreciation = $25800

so here

depreciation expense = $25800 debit

accumulated depreciation = $25800 credit

Answer 2

The journal entry that would be needed to record the machines' first year depreciation under the units-of-production method is to debit the depreciation expense by $25800 and credit the accumulated depreciation by $25800.

What is the first year depreciation method?

Units-of-production method = (output produced that year / total output of the machine) x (Cost of asset - Salvage value)

(64500 / 135000) x ($300,000 - $15,000) = $28,500

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