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In January, 20X1, Mustang Company acquired a bubble gum machine that allows the gum to blow bubbles by itself. The machine cost $100,000 and was

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In January, 20X1, Mustang Company acquired a bubble gum machine that allows the gum to blow bubbles by itself. The machine cost $100,000 and was expected to last 10 years with no salvage value. At the beginning of the fifth year, Mustang realized that the goo in the gum was messing up the machine such that its total life is now estimated to be seven years (three years remaining life) instead of ten years. Straight-line depreciation has been used for the previous four years so that total depreciation recognized to date is $40,000. The journal entry to record depreciation expense under the straight-line method at the end of year five will include Debit retained earnings $40,000 Debit depreciation expense $20,000 Credit accumulated depreciation $60,000 Credit cash $10,000

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