g Hondae Inc. purchased equipment on January 1, 2018, at a cost of $320,000. The company estimated a $8,000 salvage value and that the equipment will have a useful life of 10 years. The company elected to use the straight-line depreciation method. In entering the information for the asset into the depreciation system, the salvage value was inadvertently entered as $80,000 instead of $8,000. Ignoring income taxes, record the journal entry to correct the error discovered in 2021.

Honda Inc.

Journal

To correct the error:

Debit Retained Earnings $21,600

Credit Accumulated Depreciation $21,600

To record the correction of depreciation error.

For the current year:

Debit Depreciation Expense $31,200

Credit Accumulated Depreciation $31,200

To record the depreciation expense for the year.

Explanation:

a) Data and Calculations:

January 1, 2018 Purchase of Equipment at a cost = $320,000

Estimated salvage value = $8,000

Recorded salvage value = $80,000

Estimated useful life = 10 years

Annual depreciation expense based on recorded salvage value = ($320,000 - 80,000)/10 = $24,000

Accumulated depreciation for 3 years (2018 to 2020) = $72,000 ($24,000 * 3 years)

Correct annual depreciation expense = ($320,000 - 8,000)/10 = $31,200

This means that depreciation expense was being understated annually by $7,200 ($31,200 - $24,000).

answer; hazards;

if you use only 25 for your entertainment and only 200 for the groceries that you really need and take out the 50 per month for the computer then that should be enough