Question

Pacifica Manufacturing retired a computerized metal stamping machine on December 31, 2011. Pacifica sold the machine to another company and did not replace it. The following data are available for the machine: Cost (installed), 1/1/2006 $920,000 Residual value estimated on 1/1/2006 160.000 Estimate life as of 1/1/2006 8 years The machine was sold for $194,000 cash. Pacifica uses the straight-l ine method of depreciation. Hide 1. Prepare the journal entry to record depreciation expense for 2011

Answer 1

Depreciation expense $95,000

To Accumulated depreciation $95,000

(Being the depreciation expense is recorded)

Step-by-step explanation:

The journal entry is shown below:

Depreciation expense $95,000

To Accumulated depreciation $95,000

(Being the depreciation expense is recorded)

The computation is shown below:

= (Cost installed - Residual value) ÷ Useful life

= ($920,000 - $160,000) ÷ 8

= $95,000

For recording this journal entry we debited the depreciation expense as it is increased the expenses while at the same time it decreased the value of the fixed assets so the accumulated depreciation is credited