1. On January 2, 2016, Maria Co. bought a machine for $400,000 with a salvage value of $20,000 and a four-year useful life. Straight-line depreciation was used. However, during 2016 and 2017, depreciation expense was erroneously calculated using a $50,000 salvage value. The error was discovered in 2018 after the 2017 books had been closed.Required:Prepare the correcting entry in 2018.

2. On January 1, 2016, the Paul Truck Repair acquired equipment at a cost of $55,000. At that time, the equipment was estimated to have a residual value of $5,000 at the end of an estimated five-year service life. During 2016 and 2017, the company recorded straight-line depreciation on the equipment. Required: Prepare all the journal entries for 2018 relating to the equipment for each of the following independent situations (ignoring income taxes):

a. Assume that the company switched to sum-of-the-years'-digits depreciation at the beginning of 2018 with a new estimated remaining life of four years.

b. Assume, instead, that at the beginning of 2018, the equipment is determined to have a five-year remaining service life. Straight-line depreciation will still be used.

c. Assume, instead, that at the beginning of 2018 the company discovered that it had erroneously ignored the estimated residual value in the computation of its depreciation for 2016 and 2017.