Presented below are selected transactions at Ridge Company for 2014. Jan 1 Retir
ID: 2461515 • Letter: P
Question
Presented below are selected transactions at Ridge Company for 2014.
Jan 1 Retired a piece of machinery that was purchased on January 1, 2004. The machine cost $64,640 on that date. It had a useful life of 10 years with no salvage value.
June 30 Sold a computer that was purchased on January 1, 2011. The computer cost $36,310. It had a useful life of 5 years with no salvage value. The computer was sold for $13,140
Dec. 31 Discarded a delivery truck that was purchased on January 1, 2010. The truck cost $42,860. It was depreciated based on a 6-year useful life with a $2,780 salvage value.
Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on assets disposed of. Ridge Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2013.)
Jan 1
Debit
Credit
June 30
Debit
Credit
(To record depreaciation to date of disposal)
June 30
Debit
Debit/Credit
Debit/Credit
Debit/Credit
Dec 31
Debit
Credit
(To record depreciation to the date of disposal)
Dec 31
Debit
Debit/Credit
Debit/Credit
Please show how you come up with your answer
Explanation / Answer
Annual depreciation on computer = (36310 - 0) / 5 = 7262
Depreciation till 30 june 2014 = 7262 *6/12 =3631
2)Depreciation on truck = (42860-2780)/6=6680
Date Account title Debit credit 1 jan 2014 Accumulated depreciation 64640 Machinery /Plant asset 64640 [being machinery retired] 30 june 2014 Depreciation expense 3631 Accumulated depreciation 3631 [to recorde depreciation for 2014 ) 30 june 2014 cash 13140 Accumulated depreciation [7262+7262+7262+3631] 25417 Plant asset 36310 Gain on disposal of plant asset 2247 [being computer sold ] 31 dec2 014 Depreciation expense 6680 Accumulated depreciation 6680 [depreciation recorded] Accumulated depreciation [6680*5 years [] 33400 Loss on disposal of plant asset 9460 Plant asset 42860
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