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23 February, 11:40

Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $87,000. The machine's useful life is estimated to be 5 years, or 400,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units of product. What journal entry would be needed to record the machines' second year depreciation under the units-of-production method?

Debit Depletion Expense $16,000; credit Accumulated Depletion $16,000.

Debit Depletion Expense $16,900; credit Accumulated Depletion $16,900.

Debit Depreciation Expense $16,900; credit Accumulated Depreciation $16,900.

Debit Amortization Expense $16,900; credit Accumulated Amortization $16,900.

Debit Depreciation Expense $16,000; credit Accumulated Depreciation $16,000.

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Answers (1)
  1. 23 February, 14:00
    0
    Option (c) is correct.

    Explanation:

    Depreciable value of machine:

    = Cost of machine - salvage value

    = $87,000 - $7,000

    = $80,000

    Depreciation of second year:

    = ($80,000 : 400,000) * 84500

    = $16,900

    Therefore, the journal entry is as follows:

    Depreciation Expenses A/c Dr. $16,900

    To accumulated depreciation $16,900

    (To record the machines' second year depreciation)
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