How do you calculate Depreciation expense, Accumulated Expense , Loss on Disposa
ID: 2423297 • Letter: H
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How do you calculate Depreciation expense, Accumulated Expense , Loss on Disposal
Your answer is, partially Correct. Here are selected 2014 transactions of Cleaned Corportion. Jan.1 Retired a piece of machinery that was purchased on January 1. 2004. The computer cost $36,400 and had a useful life of 10 year with no salvage value. June 30 Sold a computer that was purchased on January 1, 2012. The computer cost $36,400 and had d useful life of 4 years. with no salvage value. The computer was sold for $16,000 cash. Dec. 31 Sold a delivery truck for $9,430 cash. The truck cost $24,770 when it was purchased on January 1. 2011. and was depreciated based on a 5-year useful life with d $6,000 salvage value. Journalize all entries, required for truck above dates., including entries to update depreciation on assets disposed of, where applicable. Cleland Corporation uses Straight-line depreciation.Explanation / Answer
Cleland Corporation Journal Entries for transactions incurred during 2014 Date Particulars Debit $ Credit $ 01/01/2014 Accumulated Depreciation - Machinery A/c DR 61390 To Machinery A/c 61390 30/06/2014 Cash A/c DR 6000 Accumulated Depreciation - Computer A/c DR 22750 Loss on Sale of Computer A/c DR 7650 To Computer A/c 36400 Accumulated Depreciation on Computer is calculated as under : Cost = $ 36,400 depreciated for 4 years which comes to $ 9,100 per year Since the computer was sold on 30/06/2014, depreciation is to be calculated for 2 years 6 months 31/12/2014 Cash A/c DR 9430 Accumulated Depreciation - Truck A/c DR 12876 Loss on Sale of Delivery Truck A/c DR 2464 To Delivery Truck A/c 24770 Accumulated Depreciation on the Delivery Truck Depreciable Value = $ 24,770 - $ 3,310 = $ 21, 460. No. of years useful life = 5 years Depreciation per year = $ 21,460 / 5 = $ 4,292 Depreciation for three years = $ 4,292 X 3 = $ 12,876
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