Question

Oriole Company had the following assets on January 1, 2022.

Item		Cost		Purchase Date		Useful Life (in years)		Salvage Value
Machinery		$74,000		Jan. 1, 2012		10		$ 0
Forklift		33,000		Jan. 1, 2019		5		0
Truck		39,400		Jan. 1, 2017		8		3,000

During 2022, each of the assets was removed from service. The machinery was retired on January 1. The forklift was sold on June 30 for $12,300. The truck was discarded on December 31.

Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on disposed assets. The company uses straight-line depreciation. All depreciation was up to date as of December 31, 2021.

Answer 1

Answer:

No.	Date	Account titles and explanation	Debit	Credit
1	Jan-01	Accumulated depreciation- Machinery	74,000
		Machinery		74,000
		To record sale of machinery
2	Jun-30	Depreciation expense	3,300
		Accumulated depreciation- Forklift		3,300
		To record depreciation expense on forklift
3	Jun-30	Cash	12,300
		Accumulated depreciation- Forklift	23,100
		Gain on disposal of forklift		2,400
		Forklift		33,000
		To record sale of forklift
4	Dec-31	Depreciation expense	4,550
		Accumulated depreciation- Truck		4,550
		To record depreciation expense on truck
5	Dec-31	Accumulated depreciation- Truck	22,750
		Loss on disposal of truck	16,650
		Truck		39,400
		To record sale of truck

Calculation:

Entry #1:

To record sale of machinery in 2022

Accumulated depreciation- Machinery = the value of th machinery = 74,000

Entry #2:

To record depreciation expense on forklift

Depreciation expense = 33,000 / 5 * 6/12 = 3,300

Entry #3:

To record sale of forklift

Accumulated depreciation- Forklift = 33,000 *3/5 + 3,300 = 23,100

Value of Forklift = 33,000

Cash received = 12,300

Gain on sale = 33,000 - 23,100 + 12,300 = 2,400

Entry #4:

To record depreciation expense on truck

Depreciation expense = (39,000 - 3,000)/8 = 4,550

Entry #5:

To record sale of truck

Accumulated depreciation- Truck = (39,400 - 3,000)/8*5 = 22,750

Value of Truck = 39,400

Loss on disposal of truck = 39,400 - 22,750 = 16,650