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journal entries

Field Instruments completed the following transactions and events involving its machinery:

2004
Jan. 1 Paid \$106,600 cash plus \$6,400 in sales tax for a new machine. The machine is estimated
to have a six-year life and a \$9,800 salvage value.
Dec. 31 Recorded annual straight-line depreciation on the machinery.

2005
Dec. 31 Due to new information obtained earlier in the year, the machine's estimated useful life was
changed from six to four years, and the estimated salvage value was increased to \$13,050.
Recorded annual straight-line depreciation on the machinery.

2006
Dec. 31 Recorded annual straight-line depreciation on the machinery.
Dec. 31 Sold the machine for \$25,240 cash.

Prepare journal entries to record these transactions and events

Solution Preview

2004:

Jan 1:
Total Purchase Price will be \$106,600 + 6,400 = \$113,000
So journal entry will be:
Machine 113,000
Cash 113,000

Depreciation per year will be : (113,000 - 9,800)/6 = \$17,200

Dec 31:
Depreciation Expense 17,200
...

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