Feb. 10 Office equipment costing $26,000 was given to a scrap dealer at no charg
ID: 2359957 • Letter: F
Question
Feb. 10 Office equipment costing $26,000 was given to a scrap dealer at no charge. At the date of disposal, accumulated depreciation on the office equipment amounted to $25,800. Apr. 1 Ramirez sold land and a building to Claypool Associates for $900,000, receiving $100,000 cash and a five-year, 9 percent note receivable for the remaining balance. Ramirez's records showed the following amounts: Land, $50,000; Building, $550,000; Accumulated Depreciation: Building (at the date of disposal), $250,000. Aug. 15 Ramirez traded in an old truck for a new one. The old truck had cost $26,000, and its accumulated depreciation amounted to $18,000. The list price of the new truck was $39,000, but Ramirez received a $10,000 trade-in allowance for the old truck and paid only $29,000 in cash. Ramirez includes trucks in its Vehicles account. Oct. 1 Ramirez traded in its old computer system as part of the purchase of a new system. The old system had cost $15,000, and its accumulated depreciation amounted to $11,000. The new computer's list price was $8,000. Ramirez accepted a trade-in allowance of $500 for the old computer system, paying $1,500 down in cash and issuing a one-year, 8 percent note payable for the $6,000 balance owed.
a. Prepare journal entries to record each of the disposal transactions. Assume that depreciation expense on each asset has been recorded up to the date of disposal. Thus, you need not update the accumulated depreciation figures stated in the problem.
DATE GENERAL JOURNAL DEBIT CREDIT
Feb. 10
Apr.1
Aug. 15
Oct. 1
Explanation / Answer
Feb 10 Loss on Disposal of Plant Assets 200 Accumulated Depreciation: Office Equipment 25,800 Office Equipment 26,000 Scrapped office equipment; received no salvage value. Apr 1 Cash 100,000 Notes Receivable 800,000 Accumulated Depreciation: Building 250,000 Land 50,000 Building 550,000 Gain on Sale of Plant Assets 550,000 Sold land and building for a $100,000 cash down- payment and a 5-year, 9% note for the balance. Aug 15 Vehicles (new truck) 39,000 Accumulated Depreciation: Vehicles (old truck) 18,000 Vehicles (old truck) 26,000 Gain on Disposal of Plant Assets 2,000 Cash 29,000 To record trade-in of old truck on new; trade-in allowance exceeded book value by $2,000. Oct 1 Office Equipment (new computer) 8,000 Loss on Trade-in of Plant Assets 3,500 Accumulated Depreciation: Office Equip. (old computer) 11,000 Office Equipment (old computer) 15,000 Cash 1,500 Notes Payable 6,000 Acquired new computer system by trading in old computer, paying part cash, and issuing a 1-year, 8% note payable. Recognized loss equal to book value of old computer ($4,000) minus trade-in allowance ($500).
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