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Question 1: Write the journal entry required on Dec 31, 2019 for depreciation. Peanut Corporation purchased a vehicle on Jan 1, 2019 for $86,000. The estimated life of the vehicle is 8 years and estimated residual value is $1,000. Calculate the depreciation expense using straight-line method.
How much would be the balance in the accumulated depreciation account on Dec 31, 2020?
Question 2: Peanut Corporation also purchased a machine on Jan 4, 2019 for $47,000. The estimated life of the machine is 7 years or 85,000 hours. The estimated residual value is $2,000. What is the amount of depreciation expense for 2019 and 2020 if Peanut Corporation used the machine for 8,000 hours in 2019 and 10,000 hours in 2020 and uses the units-of-production method of depreciation?
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