Metlock Company is in the process of preparing its financial statements for 2020. Assume that no entries for depreciation have been recorded in 2020. The following information related to depreciation of fixed assets is provided to you. 1. Metlock purchased equipment on January 2, 2017 for $80.500. At that time, the equipment had an estimated useful life of 10 years with a $4.500 salvage 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 has a remaining useful life of 4 years with a $3.000 salvage value. 2. During 2020, Metlock changed from the double-dedining-balance method for its building to the straight-line method. The building originally cost $300.000. It had a useful life of 10 years and a salvage value of $30,000. The following computations present depreciation on both bases for 2018 and 2019. 2. 2019 2018 $27,000 Straight-line Declining-balance $27.000 60.000 48,000 3. Metlock purchased a machine on July 1, 2018 at a cost of $130.000. The machine has a salvage value of $14.000 and a useful life of 8 years. Metlock's bookkeeper recorded straight-line depreciation in 2018 and 2019 but failed to consider the salvage value Your answer is partially correct. Prepare the journal entries to record depreciation expense for 2020 and correct any errors made to date related to the information provided. (Ignore taxes.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) Debit Credit No. Account Titles and Explanation Depreciation Expense 1 13675 Accumulated Depreciation Equipment 13675 2. Depreciation Expense 20250 Accumulated Depreciation-Buildings JUAL 20250 3. Depreciation Expense 14500 Accumulated Depreciation-Machinery 14500 (To record current year depreciation.) Accumulated Depreciation-Machinery 14500 Retained Earnings 14500 (To correct prior year depreciation.) Your answer is partially correct. Show comparative net income for 2019 and 2020. Income before depreciation expense was $320.000 in 2020, and was $280,000 in 2019. (Ignore taxes.) METLOCK COMPANY Comparative Income Statements For the Years 2020 and 2019 2020 2019 Income before depreciation expense $ 320000 $ 280000 Depreciation expense 48425 i Net income $ 271575 eTextbook and Media Assistance Used List of Accounts Metlock Company is in the process of preparing its financial statements for 2020. Assume that no entries for depreciation have been recorded in 2020. The following information related to depreciation of fixed assets is provided to you. 1. Metlock purchased equipment on January 2, 2017 for $80.500. At that time, the equipment had an estimated useful life of 10 years with a $4.500 salvage 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 has a remaining useful life of 4 years with a $3.000 salvage value. 2. During 2020, Metlock changed from the double-dedining-balance method for its building to the straight-line method. The building originally cost $300.000. It had a useful life of 10 years and a salvage value of $30,000. The following computations present depreciation on both bases for 2018 and 2019. 2. 2019 2018 $27,000 Straight-line Declining-balance $27.000 60.000 48,000 3. Metlock purchased a machine on July 1, 2018 at a cost of $130.000. The machine has a salvage value of $14.000 and a useful life of 8 years. Metlock's bookkeeper recorded straight-line depreciation in 2018 and 2019 but failed to consider the salvage value Your answer is partially correct. Prepare the journal entries to record depreciation expense for 2020 and correct any errors made to date related to the information provided. (Ignore taxes.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) Debit Credit No. Account Titles and Explanation Depreciation Expense 1 13675 Accumulated Depreciation Equipment 13675 2. Depreciation Expense 20250 Accumulated Depreciation-Buildings JUAL 20250 3. Depreciation Expense 14500 Accumulated Depreciation-Machinery 14500 (To record current year depreciation.) Accumulated Depreciation-Machinery 14500 Retained Earnings 14500 (To correct prior year depreciation.) Your answer is partially correct. Show comparative net income for 2019 and 2020. Income before depreciation expense was $320.000 in 2020, and was $280,000 in 2019. (Ignore taxes.) METLOCK COMPANY Comparative Income Statements For the Years 2020 and 2019 2020 2019 Income before depreciation expense $ 320000 $ 280000 Depreciation expense 48425 i Net income $ 271575 eTextbook and Media Assistance Used List of Accounts
