On January 1,2016,Trueblood,Inc

question 241

Essay

On January 1,2016,Trueblood,Inc.purchased a piece of machinery for use in operations.The total acquisition cost was $33,000.The machine has an estimated useful life of three years and a residual value of $3,000.Assume that units produced by the machine will total 16,000 during 2016,23,000 during 2017,and 21,000 during 2018.
Required:
Part a.Use this information to complete the following table.

Part b.On January 1,2017,the machine was rebuilt at a cost of $7,000.After it was rebuilt,the total estimated life of the machine was increased to five years (from the original estimate of three years)and the residual value to $6,000 (from $3,000).Assume that the company chose the straight-line method for depreciation.Compute the annual depreciation expense after the change in estimates.
Part c.Prepare the adjusting entry to record the depreciation expense for the year ended December 31,2017.
Part d.On December 31,2018,the machine was sold for $7,500.Compute the book value on that date.
Part e.Prepare the journal entry to record the sale.

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Definitions:

Living Standards

The level of wealth, comfort, material goods, and necessities available to a person or community.

Progressive Tax Structure

A tax system where the tax rate increases as the taxable amount increases, placing a higher burden on wealthier individuals.

Real Incomes

Real incomes refer to the amount of goods and services that can be purchased with a given amount of money, after adjusting for inflation.

Tax Revenues

The money acquired by governments via tax collection.