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Manrow Growers, Inc., owns equipment for sowing and harvesting its organic fruit, vegetables, and tree nuts that are sold to local restaurants and grocery stores. At the beginning of 2019, an asset account for the company showed the following balances:


Equipment $350,000
Accumulated depreciation through 2018 165,000

During 2019, the following expenditures were incurred for the equipment:

Major overhaul of the equipment on January 1, 2019, that improved efficiency $42,000
Routine maintenance and repairs on the equipment 5,000

The equipment is being depreciated on a straight-line basis over an estimated life of eight years with a $20,000 estimated residual value. The annual accounting period ends on December 31.

Required:
Record the adjusting entry for depreciation on the equipment during 2018.


Sagot :

Answer: See explanation

Explanation:

The adjusting entry for depreciation on the equipment during 2018 will be calculated as:

Depreciation = (Equipment cost - Estimated residual value) / Estimated life

= ($350000 - $20000) / 8

= $41250

Debit: Depreciation = $41250

Credit: Accumulated depreciation = $41250

(To record depreciation for the year)

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