Business, 24.05.2021 14:00 120175

Presented below is information related to Novak Manufacturing Corporation. Asset Cost Estimated Salvage Estimated Life (in years)
A $46,575 $6,325 10
B 38,640 5,520 9
C 41,400 4,140 9
D 21,850 1,725 7
E 27,025 2,875 6

Required:
a. Compute the rate of depreciation per year to be applied to the plant assets under the composite method.
b. Prepare the adjusting entry necessary at the end of the year to record depreciation for the year.
c. Prepare the entry to record the sale of asset D for cash of $5,520. It was used for 6 years, and depreciation was entered under the composite method.

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Answer from: augustmarie

A. Assets Original Salvage Depreciable Depreciable SL Depreciation

Cost Value value Life Per Year

A $46,575 6,325 40,250 10 $4,025

B $38,640 5,520 33,120 9 $3,680

C $41,400 4,140 37,260 9 $4,140

D $21,850 1,725 20,125 7 $2,875

E $27,025 2,875 24,150 6 $4,025

Total $175,490 20,585 154,905 $18,745

Composite rate of Depreciation = Total Depreciation per year/Total Original Cost

Composite rate of Depreciation = 18745/175490

Composite rate of Depreciation = 0.106815

Composite rate of Depreciation = 10.68%

B. Adjusting entry Debit Credit

Depreciation Expense-Plant Asset $18,745

Accumulated Depreciation-Plant Asset $18,745

c. Journal Entry Debit Credit

Cash $5,520

Accumulated Depreciation-Plant Assets $16,330

Asset D $21,850

(Record Sale of asset D)

Answer from: Quest

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Answer from: Quest

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