(L01) (Error Analysis and Depreciation, SL and SYD) Mike Devereaux Company shows the following entries in its Equipment account for 2018. All amounts are based on historical cost.

Instructions

(a) Prepare any correcting entries necessary.

(b) Assuming that depreciation is to be charged for a full year on the ending balance in the asset account, compute the proper depreciation charge for 2018 under each of the methods listed below. Assume an estimated life of 10 years, with no salvage value. The machinery included in the January 1, 2018, balance was purchased in 2016.
(1) Straight-line. (2) Sum-of-the-years’-digits.

Transcribed Image Text:

Equipment 2018 June 30 Cost of equipment sold 2018 Jan. 1 Balance Aug. 10 Purchases 134,750 32,000 12 Freight on equipment purchased 700 25 Installation costs 2,700 Nov. 10 Repairs 500 (purchased prior to 2018) 23,000