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In 2018, internal auditors discovered that Fay, Inc., had debited an expense account for the $4,600,000 cost of a machine purchased on January 1, 2015. The machine's useful life was expected to be 20 years with no residual value. Straight-line depreciation is used by Fay. The journal entry to correct the error will include a credit to accumulated depreciation of:_____.

User Phoku
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1 Answer

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Answer:

$230,000

Step-by-step explanation:

Depreciation Charge (Straight line) = (Cost - Residual Value) ÷ Estimated Useful Life

therefore,

2018 Depreciation Charge = ($4,600,000 - $ 0) ÷ 20

= $230,000

The journal entry to correct the error will include a credit to accumulated depreciation of $230,000

User Jerome Cance
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