Problem 22-2 (Part Level Submission) Sunland Company is in the process of preparing its financial statements for 2017. Assume that no entries for depreciation have been recorded in 2017. The following information related to depreciation of fixed assets is provided to you. 1. Sunland purchased equipment on January 2, 2014, for $80,400. At that time, the equipment had an estimated useful life of 10 years with a $5,400 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2017, 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 2017, Sunland changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $320,000. It had a useful life of 10 years and a salvage value of $32,000. The following computations present depreciation on both bases for 2015 and 2016. Straight-line Declining-balance 2016 $28,800 51,200 2015 $28,800 64,000 nes Of plan 3. Sunland purchased a machine on July 1, 2015, at a cost of $130,000. The machine has a salvage value of $20,000 and a useful life of 8 years. Sunland's bookkeeper recorded straight- line depreciation in 2015 and 2016 but failed to consider the salvage value. (a) Prepare the journal entries to record depreciation expense for 2017 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 tities and enter o for the amounts.) No. Account Titles and Explanation Dehit System M OUNCEMENTS PRINTER VERSION BACK the journal entries to record depreciation expense for 2017 and correct any errors ma ated to the information provided. (Ignore taxes.) (Credit account titles are atically indented when amount is entered. Do not indent manually. If no entry ed, select "No Entry" for the account titles and enter o for the amounts.) ccount Titles and Explanation Debit Credit Depreciation Expense 13725 Accumulated Depreciat 13725 Depreciation Expense 21,600 T Accumulated Depreciat 21600 TDepreciation Expense 13750 T 13750 Accumulated Depreciat (To record current year depreciation.) Accumulated Depreciation 3750 3750 T Retained Earnings (To correct prior year depreciation.) SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER LINK TO TEXT DW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER NK TO TEXT Attempts: 1 of 3 used (b) Your answer is partially correct. Try again. Show comparative net income for 2016 and 2017. Income before depreciation expense was $300,000 in 2017, and was $320,000 in 2016. (Ignore taxes.) SUNLAND COMPANY Comparative Income Statements For the Years 2017 and 2016 2017 2016 300000 Income before depreciation expense Depreciation expense 320000 TO 49075 72450 Net income 257550 270925 SHOW LIST OF ACCOUNTS LINK TO TEXT Attempts: 2 of 3 used SAVE FOR LATER LEGA Adver SUBMIT
