Exercise 9-9 Presented below are selected transactions at Ridge Company for 2015

Question

Exercise 9-9

Presented below are selected transactions at Ridge Company for 2015.

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, 2014.) (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

Jan. 1

June 30

(To record depreciation to date of disposal)

June 30

Dec. 31

(To record depreciation to date of disposal)

Dec. 31

Jan. 1 Retired a piece of machinery that was purchased on January 1, 2005. The machine cost $63,860 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, 2012. The computer cost $37,850. It had a useful life of 5 years with no salvage value. The computer was sold for $14,320. Dec. 31 Discarded a delivery truck that was purchased on January 1, 2011. The truck cost $34,150. It was depreciated based on a 6-year useful life with a $3,490 salvage value.

Explanation / Answer

Journal Entry Date Account Titles and Explanation Debit $ Credit $ Jan. 1 Accumulated Depreciation-Equipment    63,860 Equipment    63,860 June.30 Depreciation Expense      3,785 Accumulated Depreciation-Equipment      3,785 (To record depreciation to date of disposal) June.30 Cash 14320 Accumulated Depreciation-Equipment 26495 Gain on Disposal of Plant Assets 2965 Equipment 37850 (To record sale of computer at a gain/loss) Dec. 31 Depreciation Expense      5,110 Accumulated Depreciation-Equipmen      5,110 (To record depreciation to date of disposal) Dec. 31 Loss on Disposal of Plant Assets 8600 Accumulated Depreciation-Equipment 25550 Equipment 34150 (To record retirement of equipment at a gain/loss) Working Note June.30 Accumulated Depreciation-Equipment ($37,850 *1/5 * 6/12) = $3,785 June.30 Accumulated Depreciation-Equipment ($37,850 * 3/5 = $22,710; $22,710 + $3,785) = $26,495 Gain on Disposal of Plant Assets [$14,320 – ($37,850 – $26,495)] = $2,965 Dec. 31 Accumulated Depreciation-Equipment [($34,150 – $3,490) * 1/6] = $5,110 Dec. 31 Accumulated Depreciation-Equipment [($34,150 – $3,490) * 5/6] = $25,550

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