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On March 31, 2013, the Herzog Company purchased a factory complete with machinery and equipment. The allocation of the total purchase price of $1,000,000 to the various types of assets along with estimated useful lives and residual values are as follows:
On June 29, 2014, machinery included in the March 31, 2013, purchase that cost $100,000 was sold for $80,000. Herzog uses the straight-line depreciation method for buildings and machinery and the sum-of-the-years'-digits method for equipment. Partial-year depreciation is calculated based on the number of months an asset is in service.
Compute depreciation expense on the building, machinery, and equipment for 2013.
Prepare the journal entries to:
a) record the depreciation on the machinery sold on June 29, 2014
b) and the sale of machinery.
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