Problem 22-02 Sweet 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. Sweet purchased equipment on January 2, 2017, for $89,500. 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 $2,800 salvage value. 2. During 2020, Sweet changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $280,000. It had a useful life of 10 years and a salvage value of $28,000. The following computations present depreciation on both bases for 2018 and 2019. Straight-line Declining-balance 2019 $25,200 44,800 2018 $25,200 56,000 3. Sweet purchased a machine on July 1, 2018, at a cost of $110,000. The machine has a salvage value of $20,000 and a useful life of 8 years. Sweet's bookkeeper recorded straight-line depreciation in 2018 and 2019 but failed to consider the salvage value. Your answer is partially correct. Try again. 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 o for the amounts.) No. Account Titles and Explanation Debit Credit 1 Depreciation Expense 15300 Accumulated Deprec 15300 2. Depreciation Expense 18900 Accumulated Deprec 18900 3. Depreciation Expense 11250 11250 Accumulated Deprec (To record current year depreciation.) Accumulated Depreciati 56000 44800 Retained Earnings (To correct prior year depreciation.) SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT LINK TO TEXT LINK TO TEXT Accumulated Depreciati 56000 Retained Earnings 44800 (To correct prior year depreciation.) SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT LINK TO TEXT LINK TO TEXT x Your answer is incorrect. Try again. Show comparative net income for 2019 and 2020. Income before depreciation expense was $290,000 in 2020, and was $280,000 in 2019. (Ignore taxes.) SWEET COMPANY Comparative Income Statements For the Years 2020 and 2019 2020 2019 Income before depreciation expense 320000 30000 Depreciation expense -46400 -66150 Net income 273600|| 238350 Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT LINK TO TEXT LINK TO TEXT
