Date Account Titles and Explanation Debit Credit (To record depreciation expense

Question

Date Account Titles and Explanation Debit Credit (To record depreciation expense for 2017) (To record depreciation expense for 2017) Jan. 1 Retired a piece of machinery that was purchased on January 1, 2007. The machine cost $61,900 and had a useful life of 10 years with no salvage value. June 30 Sold a computer that was purchased on January 1, 2015. The computer cost $36,400 and had a useful life of 4 years with no salvage value. The computer was sold for $4,600 cash. Dec. 31 Sold a delivery truck for $9,470 cash. The truck cost $24,500 when it was purchased on January 1, 2014, and was depreciated based on a 5-year useful life with a $3,500 salvage value.

Explanation / Answer

Explanation :

June 30

Depreciation Expense = ($36,400 x 1/4 x 6/12) = $4,550

Accumulated Depreciation—Equipment = ($36,400 x 2/4 = $18,200; $18,200 + $4,550)= $22,750

Loss on Disposal of Plant Assets= [$4,600 – ($36,400 – $22,750)]= $9,050

Dec. 31

Depreciation Expense = [($24,500 – $3,500) x 1/5]= $4,200

Accumulated Depreciation—Equipment= [($24,500 – $3,500) x 4/5]= $16,800

Gain on Disposal of Truck = [$9,470 - ($24,500 - $16,800)] = $1,770

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Date Account Titles and Explanation Debit Credit Jan. 1 Accumulated Depreciation $61,900 Machinery $61,900 June 30 Depreciation Expense $4,550 Accumulated Depreciation $4,550 (To record depreciation for first 6 months of 2017) Accumulated Depreciation $22,750 Cash $4,600 Loss on Disposal $9,050 Equipment $36,400 (To record sale of Computer) Dec. 31 Depreciation Expense $4,200 Accumulated Depreciation $4,200 (To record Depreciation expense for the year 2017) Accumulated Depreciation $16,800 Cash $9,470 Equipment $24,500 Gain on Disposal $1,770 (To record sale of delivery truck)

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