As at December 31, 2020, Kendrick Corporation is having its financial statements audited for the first time ever. The auditor has found the following items that might have an effect on previous years.

1.

Kendrick purchased equipment on January 2, 2017, for $106,600. At that time, the equipment had an estimated useful life of 10 years, with a $8,200 residual value. The equipment is depreciated on a straight-line basis. On January 2, 2020, as a result of additional information, the company determined that the equipment had a total useful life of seven years with a $4,920 residual value.

2.

During 2020, Kendrick changed from the double-declining-balance method for its building to the straight-line method because the company thinks the straight-line method now more closely follows the benefits received from using the assets. The current year depreciation was calculated using the new method following straight-line depreciation. In case the following information was needed, the auditor provided calculations that present depreciation on both bases. The building had originally cost $0.98 million when purchased at the beginning of 2018 and has a residual value of $98,000. It is depreciated over 20 years. The original estimates of useful life and residual value are still accurate.

		2020		2019		2018
Straight-line		$44,100		$44,100		$44,100
Double-declining-balance		79,380		88,200		98,000

3.

Kendrick purchased a machine on July 1, 2017, at a cost of $140,000. The machine has a residual value of $14,000 and a useful life of eight years. Kendricks bookkeeper recorded straight-line depreciation during each year but failed to consider the residual value.

4.

Prior to 2020, development costs were expensed immediately because they were immaterial. Due to an increase in development phase projects, development costs have now become material and management has decided to capitalize and depreciate them over three years. The development costs meet all six specific conditions for capitalization of development phase costs. Amounts expensed in 2017, 2018, and 2019 were $300, $800, and $800, respectively. During 2020, $4,500 was spent and the amount was debited to Deferred Development Costs (an asset account).

(a)

Prepare the necessary journal entries to record each of the changes or errors. The books for 2020 have been adjusted but not closed. Ignore income tax effects. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.	Account Titles and Explanation	Debit	Credit
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