On December 31, 2019, Vail Company owned the following assets Asset Date of Cost Accumulated Life in Residual Purchase Depreciation Years Value Building 1 1 2017 $50,000 $3,750(a) 40 $0 Office machinery 1 1 2017 20,000 9,760(b) 10 2,000 Office fixtures 1 1 2017 30,000 20,000(c) 5 5,000 (a) Straight line depreciation (b) Double declining balance depreciation (c) Sum of the years digits depreciation Vail computes depreciation and amortization expense to the nearest whole year During 2020, Vail engaged in the following transactions Jan 3 Extended the building at a cost of $30,000 The extension provided an addition to the service potential of the building Vail paid cash for the building extension Mar 7 Sold a piece of office machinery that had originally cost $4,000 and that had accumulated depreciation of $1,952 on December 31, 2019 The machine was sold for $3,000 May 17 Purchased office fixtures and office machinery for $9,200 The supplier reduced the price because of the joint purchase If purchased separately, the office fixtures would have cost $6,000 and the office machinery $4,000 Delivery costs paid by Vail were $200 The machinery was accidentally damaged during installation and cost $230 to repair The office fixtures have an estimated life of 5 years and a residual value of $250 The office machinery has an estimated life of 10 years and a residual value of $500 Aug 10 Exchanged the presidents desk (classified as office fixtures) for a larger desk belonging to a friend of the president The desk had cost $600 and had accumulated depreciation on December 31, 2019, of $400 and an estimated residual value of $100 The new desk had a value of $900 and $700 cash was paid Oct 20 Serviced and adjusted the office machinery at a cost of $125 Required 1 Check the accuracy of the accumulated depreciation balances at December 31, 2019 2 Prepare journal entries to record the preceding events in 2020, as well as the year end recording of depreciation expense 3 Prepare an Accumulated Depreciation account for each category of assets, enter the beginning balance, post the journal entries from Requirement 2, and compute the ending balance

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 28, 2024

On December 31, 2019, Vail Company owned the following assets:

Asset	Date of	Cost	Accumulated	Life in	Residual
Purchase	Depreciation	Years	Value
Building	1/1/2017	$50,000	$3,750(a)	40	$0
Office machinery	1/1/2017	20,000	9,760(b)	10	2,000
Office fixtures	1/1/2017	30,000	20,000(c)	5	5,000

(a) Straight-line depreciation; (b) Double-declining-balance depreciation; (c) Sum-of-the-years-digits depreciation

Vail computes depreciation and amortization expense to the nearest whole year. During 2020, Vail engaged in the following transactions:

Jan.	3	Extended the building at a cost of $30,000. The extension provided an addition to the service potential of the building. Vail paid cash for the building extension.
Mar.	7	Sold a piece of office machinery that had originally cost $4,000 and that had accumulated depreciation of $1,952 on December 31, 2019. The machine was sold for $3,000.
May	17	Purchased office fixtures and office machinery for $9,200. The supplier reduced the price because of the joint purchase. If purchased separately, the office fixtures would have cost $6,000 and the office machinery $4,000. Delivery costs paid by Vail were $200. The machinery was accidentally damaged during installation and cost $230 to repair. The office fixtures have an estimated life of 5 years and a residual value of $250. The office machinery has an estimated life of 10 years and a residual value of $500.
Aug.	10	Exchanged the presidents desk (classified as office fixtures) for a larger desk belonging to a friend of the president. The desk had cost $600 and had accumulated depreciation on December 31, 2019, of $400 and an estimated residual value of $100. The new desk had a value of $900 and $700 cash was paid.
Oct.	20	Serviced and adjusted the office machinery at a cost of $125.

	Required:
1.	Check the accuracy of the accumulated depreciation balances at December 31, 2019.
2.	Prepare journal entries to record the preceding events in 2020, as well as the year-end recording of depreciation expense.
3.	Prepare an Accumulated Depreciation account for each category of assets, enter the beginning balance, post the journal entries from Requirement 2, and compute the ending balance.