Problem 10-3A (Part Level Submission) On January 1, 2017, Evers Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $53,500. Related expenditures included: sales tax $2,600, shipping costs $100, insurance during shipping $120, installation and testing costs $80, and $150 of oil and lubricants to be used with the machinery during its first year of operations. Evers estimates that the useful life of the machine is 5 years with a $4,200 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. Machine B: The recorded cost of this machine was $180,000. Evers estimates that the useful life of the machine is 4 years with a $10,200 salvage value remaining at the end of that time period. (a) Your answer is correct. Prepare the following for Machine A. (Round answers to 0 decimal places, e.g. 5,125. 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 0 for the amounts.) 1. The journal entry to record its purchase on January 1, 2017. 2. The journal entry to record annual depreciation at December 31, 2017. No. Account Titles and Explanation Debit Credit 1. Equipment 56400 Cash 56400 2. Depreciation Expense 10440 Accumulated Depreciation-Equipment 10440 (b) Your answer is partially correct. Calculate the amount of depreciation expense that Evers should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to 0 decimal places, e.g. 2,125.) (1) (2) (3) Evers uses the straight-line method of depreciation. Evers uses the declining-balance method. The rate used is twice the straight-line rate. Evers uses the units-of-activity method and estimates that the useful life of the machine is 150,850 units. Actual usage is as follows: 2017, 52,500 units; 2018, 42,000 units; 2019, 31,500 units; 2020, 24,850 units. Depreciation Expense 2018 2019 2017 2020 Straight-line method 42450 42450 42450 42450 $ $ $ x Declining-balance method 90000 45000 22500 11250 $ $ $ |> Units-of-activity method 59095 47276 35457 27972 (c) Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense in year 1 (2017)? The highest amount in year 4 (2020)? A The highest total amount over the 4-year period? (c) Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense in year 1 (2017)? Declining-balance method Straight-line method Units-of-activity method All of the above 020)? The highest total amount over the 4-year period
