Accounting E9-9

Presented below are selected transactions at Ingles Company for 2011.


Jan.  1Retired a piece of machinery that was purchased on January 1, 2001. The machine cost $62,000 on that date. It had a useful life of 10 years with no salvage value.
30-JunSold a computer that was purchased on January 1, 2008. The computer cost $40,000. It had a useful life of 5 years with no salvage value. The computer was sold for $14,000.
Dec. 31Discarded a delivery truck that was purchased on January 1, 2007. The truck cost $39,000. It was depreciated based on a 6-year useful life with a $3,000 salvage value.



Journalize entries for disposal of plant assets

Instructions

Journalize all entries required on the above dates,
including entries to update depreciation, where applicable, on assets disposed of. Ingles Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2010.)
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Jan. 1

Accumulated Depreciation—Machinery 62,000
Machinery 62,000

June 30

Depreciation Expense 4,000
Accumulated Depreciation(Computer)  4,000

Formula ($40,000 * 1/5 * 6/12)

June 30

Cash 14,000
Accumulated Depreciation—Computer 28,000
($40,000 * 3/5 = $24,000; $24,000 + $4,000)

Gain on Disposal 2,000
  [$14,000 – ($40,000 – $28,000)]
Computer 40,000

Dec. 31

Depreciation Expense6,000
Accumulated Depreciation—Truck6,000
  [($39,000 – $3,000) X 1/6]
Dec. 31

Loss on Disposal  9,000
Accumulated Depreciation—Truck30,000
  [($39,000 – $3,000) * 5/6]
Delivery Truck 39,000

answered 2 years ago

josh29

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jan 1 62,000

answered 2 years ago

janis176

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  • 0

39,000

answered 2 years ago

janis176






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