problem at the beginning of the year a company


Problem

At the beginning of the year, a company bought three new machines for its production facilities. The machines were all different so each had to be recorded separately. Below are the costs related to each purchase.

 

Machine A

Machine B

Machine C

Amount paid for the machine

14,000

28,500

11,200

Installation cost

600

1,000

400

Delivery cost

600

800

600

Insurance cost

450

600

400

At the end of the first year, each machine had been operated 5,200 hours

Required:

  1. Compute the cost of each machine.
  2. Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following:

Machine

Life

Residual Value

Depreciation Method

A

6 years

1,000

Straight-line

B

50,000 hours

2,000

Units-of-production

C

5 years

1,000

Double-declining-balance

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Financial Accounting: problem at the beginning of the year a company
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