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vladimir2022 [97]
2 years ago
5

Bailand Company purchased a building for $148,000 that had an estimated residual value of $8,000 and an estimated service life o

f 10 years. Bailand purchased the building 4 years ago and has used straight-line depreciation. At the beginning of the fifth year (before it records depreciation expense for the year), the following independent situations occur:
Business
1 answer:
baherus [9]2 years ago
5 0

The  journal entries relating to the building for the fifth year is: Debit Depreciation expense  $10,500; Credit Accumulated depreciation $10,500.

<h3>Journal entries</h3>

1. Dec 31  

Debit Depreciation expense         $10,500

Credit Accumulated depreciation   $10,500

(To record depreciation expense )

Book value=$148,000-($148,000-$8,000/10×4)]

Book value=$148,000-$56,000

Book value=$92,000

Depreciation=$92,000-$8,000/8

Depreciation=$10,500

2. Dec 31  

Debit Depreciation expense $24,000

Credit Accumulated depreciation $24,000

[($92,000-$8,000)×6/21]

(To record depreciation expense)

3. Dec 31    

Debit Accumulated depreciation $3,200.00

[($8,000×4)/10]

Credit Retained earnings              $3,200.00

(To record prior year adjustment for depreciation expense)

Dec 31  

Debit  Depreciation expense         $10,000.00

Credit Accumulated depreciation             $10,000.00

[($148,000-$8,000)/10]

(To record depreciation expense)

Therefore the  journal entries relating to the building for the fifth year is: Debit Depreciation expense $10,500; Credit Accumulated depreciation   $10,500.

The complete question is:

Bailand Company purchased a building for $148,000 that had an estimated residual value of $8,000 and an estimated service life of 10 years. Bailand purchased the building 4 years ago and has used straight-line depreciation. At the beginning of the fifth year (before it records depreciation expense for the year), the following independent situations occur:

1. Bailand estimates that the asset has 8 years’ life remaining (for a total of 12 years).

2. Bailand changes to the sum-of-the-years’-digits method.

3. Bailand discovers that the estimated residual value has been ignored in the computation of depreciation expense.

Required: For each of the independent situations, prepare all the journal entries relating to the building for the fifth year. Ignore income taxes.

Learn more about Journal entries here:brainly.com/question/17201601

#SPJ1

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