Exercise 9-8 Here are selected 2014 transactions of Cleland Corporation. Jan. 1

Question

Exercise 9-8

Here are selected 2014 transactions of Cleland Corporation. Jan. 1 Retired a piece of machinery that was purchased on January 1, 2004. The machine cost $61,180 and had a useful life of 10 years with no salvage value. June 30 Sold a computer that was purchased on January 1, 2012. The computer cost $36,200 and had a useful life of 4 years with no salvage value. The computer was sold for $4,030 cash. Dec. 31 Sold a delivery truck for $9,250 cash. The truck cost $24,800 when it was purchased on January 1, 2011, and was depreciated based on a 5-year useful life with a $3,330 salvage value.

Journalize all entries required on the above dates, including entries to update depreciation on assets disposed of, where applicable.

Cleland Corporation uses straight-line depreciation. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Explanation / Answer

Jan-01

Accumulated Depreciation—Machinery

$ 61,180

Machinery

$ 61,180

Jun-30

Depreciation Expense

$ 4,525

Accum Depreciation—Computer

($36,200 X 1/4 X 6/12)

$ 4,525

Cash

$ 4,030

Accumulated Depreciation—Computer

{($36,200 X 2/4) + $4,525 = $22,625}

$ 22,625

Loss on Disposal

{$4,030 – ($36,200 – $22,625)]

$ 9,545

Computer

$ 36,200

Dec-31

Depreciation Expense

$ 4,294

Accumulated Depreciation—Truck

{($24,800 – $3,330) X 1/5]

$ 4,294

Cash

$ 9,250

Accumulated Depreciation—Truck

($4,294*4)

$ 17,176

Truck

$ 24,800

Gain on Disposal

$ 1,626

Jan-01

Accumulated Depreciation—Machinery

$ 61,180

Machinery

$ 61,180

Jun-30

Depreciation Expense

$ 4,525

Accum Depreciation—Computer

($36,200 X 1/4 X 6/12)

$ 4,525

Cash

$ 4,030

Accumulated Depreciation—Computer

{($36,200 X 2/4) + $4,525 = $22,625}

$ 22,625

Loss on Disposal

{$4,030 – ($36,200 – $22,625)]

$ 9,545

Computer

$ 36,200

Dec-31

Depreciation Expense

$ 4,294

Accumulated Depreciation—Truck

{($24,800 – $3,330) X 1/5]

$ 4,294

Cash

$ 9,250

Accumulated Depreciation—Truck

($4,294*4)

$ 17,176

Truck

$ 24,800

Gain on Disposal

$ 1,626

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