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The following data relate to the Machinery account of Novak, Inc. at December 31, 2020. Machinery A B D Original cost $57,500 $63,750 $100,000 $100,000
The following data relate to the Machinery account of Novak, Inc. at December 31, 2020. Machinery A B D Original cost $57,500 $63,750 $100,000 $100,000 Year purchased 2015 2016 2017 2019 Useful life 10 years 15,000 hours 15 years 10 years Salvage value $3,875 $3,750 $6,250 $6,250 Depreciation method Activity Straight-line Sum-of-the-years'-digits $39,000 Double-declining balance $20,000 Accum. depr through 2020 $44,000 $18,750 *In the year an asset is purchased, Novak, Inc. does not record any depreciation expense on the asset. In the year an asset is retired or traded in, Novak, Inc. takes a full year's depreciation on the asset. The following transactions occurred during 2021. (a) On May 5, Machine A was sold for $16,250 cash. The company's bookkeeper recorded this retirement in the following manner in the cash receipts journal. Cash 16,250 Machinery (Machine A) 16,250 (b) On December 31, it was determined that Machine B had been used 2,625 hours during 2021. (c) On December 31, before computing depreciation expense on Machine C, the management of Novak, Inc. decided the useful life remaining from January 1, 2021, was 10 years. (d) On December 31, it was discovered that a machine purchased in 2020 had been expensed completely in that year. This machine cost $35,000 and has a useful life of 10 years and no salvage value. Management has decided to use the double-declining- balance method for this machine, which can be referred to as "Machine E." Prepare the necessary correcting entries for the year 2021. Record the appropriate depreciation expense on the above-mentioned machines. (If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round intermediate calculations to 3 decimal places, eg. 4.589 and final answers to O decimal places, eg. 45,892. Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (a) (To record current depreciation) (To properly record the sale) (b) (c) (d) (To correct the incorrect expensing of the asset in 2020) (d) (To correct the incorrect expensing of the asset in 2020) (To record depreciation)
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