On March 31, 2013, the Herzog Company purchased a factory complete with machiner

Question

On March 31, 2013, the Herzog Company purchased a factory complete with machinery and equipment. The allocation of the total purchase price of $1,090,000 to the various types of assets along with estimated useful lives and residual values are as follows:

     On June 29, 2014, machinery included in the March 31, 2013, purchase that cost $109,000 was sold for $89,000. Herzog uses the straight-line depreciation method for buildings and machinery and the sum-of-the-years'-digits method for equipment. Partial-year depreciation is calculated based on the number of months an asset is in service.


2013 Depreciation Expense (i did these)
Building       29500
Machienery  4510
Equipment    58569



1. Prepare the journal entry to record the depreciation on the machinery sold on June 29, 2014, and the sale of machinery

Compute depreciation expense on the building, remaining machinery, and equipment for 2014

  Asset Cost Estimated Residual Value Estimated Useful
Life in Years   Land $ 145,000         N/A N/A   Building 590,000         none 20    Machinery 150,000         12% of cost 8    Equipment 205,000 $ 16,000 6
       Total $ 1,090,000

Explanation / Answer

Given Machinary sold for $89000 Cost of Macine $109,000 residual value (12% of cost) 13080 Depreciable cost 95920 Depreciation for 3 monts (april may june) Depreciation per year = (95920/8) 11990 Depreciation for 3 monts (april may june) 2998 11990 x 3/12 Book value of macinary at te time of sale 106002 (109000 - 2998) Sale value 89000 Loss on sale of machinery (89000 - 106002) -17002 Journal entry on sale of machinery Cas Account DR 89000 Depreciation Account DR 2998 Loss on sale of Machinary DR 17002 To Machinary Account 109000

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