90.2K

Verified Solution

Link Copied!

Bailand Company purchased a building for $366,000 that had an estimated residual value of $16,000 and an estimated service life of 10 years. Bailand purchased the building 4 years ago and has used straight-line depreciation. At the beginning of the fifth year (before it records depreciation expense for the year), the following independent situations occur: 1. Bailand estimates that the asset has 8 years' life remaining (for a total of 12 years). 2. Bailand changes to the sum-of-the-years'-digits method. 3. Bailand discovers that the estimated residual value has been ignored in the computation of depreciation expense. Required: For each of the independent situations, prepare all the journal entries relating to the building for the fifth year. Ignore income taxes. ASSETS REVENUE 111 Cash 411 Sales Revenue 121 Accounts Receivable 141 Inventory EXPENSES 500 Cost of Goods Sold 181 Building 198 Accumulated Depreciation 511 Insurance Expense 512 Utilities Expense LIABILITIES 521 Salaries Expense 531 Depreciation Expense 211 Accounts Payable 231 Salaries Payable 532 Bad Debt Expense 559 Miscellaneous Expenses 250 Unearned Revenue 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings General Journal Bailand estimates that the asset has 8 years' life remaining (for a total of 12 years). Prepare the journal entry on December 31 to record depreciation in the fifth year after the change in estimate. Ignore income taxes. Additional Instruction PAGE 16 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT Prepare the journal entry on December 31 to record depreciation in the fifth year after the change in depreciation method. Additional Instruction PAGE 16 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT Prepare the journal entries on December 31 to record the prior period adjustment for the error and depreciation in the fifth year. Ignore income taxes. Additional Instruction PAGE 16 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT

Answer & Explanation Solved by verified expert

See Answer