TUTORIAL TEST 10

Kansas Company purchased a machine to use in their business on January 1, 2017 at a cost of
$50,000.

The machine estimated useful life was 5 years, and the residual or salvage value is $5,000. The
company depreciates all its assets using the straight-line method with the rate 20% per annual.

1. Prepare a depreciation schedule as given format below and prepare the journal entry to
record depreciation expense for the first year.

Annual
Year Depreciable Rate Accumulated Book
Depreciation
Cost Depreciaton Value
Expense

2. Assume that the machine is disposed of on July 1, 2018. Prepare the journal entry to
record the partial year’s depreciation.
3. Prepare the journal entry at July 1, 2018 to record the sale of the machine if:
a. Machine is sold for 37,800
b. Machine is sold for 24,000

Show all your working and calculation process.