Compute the rate of depreciation per year to be applied to

Question

Problem - Presented below is information related to Morrow Manufacturing Corporation.

Asset     Cost                       Estimated Salvage           Estimated Life (in years)

A             $40,500                 $5,500                                   10

B             33,600                   4,800                                     9

C             36,000                   3,600                                     8

D             19,000                   1,500                                     7

E              23,500                   2,500                                     6

(a) Compute the rate of depreciation per year to be applied to the plant assets under the composite method.

(b) Prepare the adjusting entry necessary at the end of the year to record depreciation for the year.

(c) Prepare the entry to record the sale of fixed asset D for cash of $5,000. It was used for 6 years, and depreciation was entered under the composite method.