Question

On December 31, 2017, before the books were closed, themanagement and accountants of Marigold Inc. made the followingdeterminations about three pieces of equipment.

1.		Equipment A was purchased January 2, 2014. It originally cost$545,000 and, for depreciation purposes, the straight-line methodwas originally chosen. The asset was originally expected to beuseful for 10 years and have a zero salvage value. In 2017, thedecision was made to change the depreciation method fromstraight-line to sum-of-the-years’-digits, and the estimatesrelating to useful life and salvage value remained unchanged.
2.		Equipment B was purchased January 3, 2013. It originally cost$187,500 and, for depreciation purposes, the straight-line methodwas chosen. The asset was originally expected to be useful for 15years and have a zero residual value. In 2017, the decision wasmade to shorten the total life of this asset to 9 years and toestimate the residual value at $3,000.
3.		Equipment C was purchased January 5, 2013. The asset’s originalcost was $161,000, and this amount was entirely expensed in 2013.This particular asset has a 10-year useful life and no residualvalue. The straight-line method was chosen for depreciationpurposes.

Additional data:

1.		Income in 2017 before depreciation expense amounted to$400,000.
2.		Depreciation expense on assets other than A, B, and C totaled$54,600 in 2017.
3.		Income in 2016 was reported at $371,300.
4.		Ignore all income tax effects.
5.		99,000 shares of common stock were outstanding in 2016 and2017.

Prepare all necessary entries in 2017 to record thesedeterminations

Prepare comparative retained earnings statements for MarigoldInc. for 2016 and 2017. The company had retained earnings of$200,400 at December 31, 2015.