E7-37B. (Learning Objectives 2, 3: Analyzing the effect of a sale of a PPE; DDB depreciation)...

E7-37B. (Learning Objectives 2, 3: Analyzing the effect of a sale of a PPE; DDB depreciation) Assume that on January 2, 20X6, LaSalle of Lyon purchased fixtures for €8,400 cash, expecting the fixtures to remain in service for five years. LaSalle has depreciated the fixtures on a double-declining-balance basis, with €1,800 estimated residual value. On September 30, 20X7, LaSalle sold the fixtures for €2,200 cash. Record both the depreciation expense on the fixtures for 20X7 and then the sale of the fixtures. Apart from your journal entry, also show how to compute the gain or loss on LaSalle’s disposal of these fixtures.

Expert Solution

Depreciation for the year 2016 using Double declining balance

= (Cost - Accumulation depreciation) x 2 X 1/useful life

= (€ 8,400-0) X 2 X 1/5

= € 3,360

Depreciation for the year 2017 using Double declining balance

= (Cost - Accumulation depreciation) x 2 X 1/useful life

= (€ 8,400-3,360) X 2 X (1/5) X (9/12)

= € 1,512

Total accumulation depreciation(€3,360+€1,512)	€ 4,872
Book value of fixtures as on September 30, 20X7 (€8,400 - € 4,872)	€ 3,528
Sale proceeds received for fixtures	€ 2,200
Loss on sale of fixtures	€ 1,328

Date	Accounts and explanation	Debit	Credit
Sep 30, 20X7	Depreciation Expense-Fixtures	€ 1,512
	Accumulation Depreciation -Fixtures		€ 1,512
	To record deprecation on fixtures for 9 months

Sep 30, 20X7	Cash	€ 2,200
	Accumulation Depreciation -Fixtures	€ 4,872
	Loss on disposal	€ 1,328
	Fixtures		€ 8,400
	Fixtures sold for cash

ekkarill92 answered 2 years ago

E3-28 Journalizing adjusting entries and analyzing their effect on the income statement Learning Objectives 3, 5...

E3-28 Journalizing adjusting entries and analyzing their effect on the income statement Learning Objectives 3, 5 The following data at July 31, 2018, are given for RCO: Depreciation, $600. Prepaid rent expires, $200. Interest expense accrued, $700. Employee salaries owed for Monday through Thursday of a five-day workweek; weekly payroll, $8,000. Unearned revenue earned, $1,000. Office supplies used, $150. Requirements Journalize the adjusting entries needed on July 31, 2018. Suppose the adjustments made in Requirement 1 were not made. Compute...

2. Sale of PPE Eastman Kodak reported that the cost of its PPE on December 31,...

2. Sale of PPE Eastman Kodak reported that the cost of its PPE on December 31, 2010 was $6,805 million. On January 1, 2010, it had been $7,327 million. Also, the balance of accumulated depreciation on December 31, 2010 was $5,254 million. On January 1, 2010, it had been $5,516 million. Depreciation expense for the fiscal year 2010 was $420 million. During 2010, the company bought new equipment with acquisition cost of $254 million worth. The company also sold PPE...

E7-7 (Algo) Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO LO7-2, 7-3 [The...

E7-7 (Algo) Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO LO7-2, 7-3 [The following information applies to the questions displayed below.] Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Units Unit Cost Inventory, December 31, prior year 2,950 $ 14 For the current year: Purchase, April 11 8,920 15 Purchase, June 1 7,860 20...

E7-7 (Algo) Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO LO7-2, 7-3 Skip...

E7-7 (Algo) Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO LO7-2, 7-3 Skip to question [The following information applies to the questions displayed below.] Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Units Unit Cost Inventory, December 31, prior year 2,800 $ 13 For the current year: Purchase, April 11 8,960 14 Purchase, June...

Calculate and explain direct material and direct labor variances (Learning Objectives 1, 2, & 3) Athena...

Calculate and explain direct material and direct labor variances (Learning Objectives 1, 2, & 3) Athena Fabrics manufactures a specialty monogrammed blanket. The following are the cost and labor standards for this blanket: Direct material (fabric): 2.0 yards per blanket at $7.50 per yard Direct labor: 0.5 direct labor hours per blanket at $16.00 per hour Actual results from last month’s production of 1,900 blankets are as follows: Actual cost of 4,940 yards of direct material (fabric) purchased: $35,074 Actual...

E7-14 Analyzing and Interpreting the Effects of the LIFO/FIFO Choice on Inventory Turnover Ratio [LO 7-2,...

E7-14 Analyzing and Interpreting the Effects of the LIFO/FIFO Choice on Inventory Turnover Ratio [LO 7-2, LO 7-3, LO 7-5] Simple Plan Enterprises uses a periodic inventory system. Its records showed the following: Inventory, December 31, using FIFO ? 40 Units @ $15 = $600 Inventory, December 31, using LIFO ? 40 Units @ $11 = $440 Transactions in the Following Year Units Unit Cost Total Cost Purchase, January 9 52 $ 16 832 Purchase, January 20 102 17 1,734...

Ethics involved with capital budgeting proposal (Learning Objectives 1, 2, 3, 4, & 5) Carlson Products,...

Ethics involved with capital budgeting proposal (Learning Objectives 1, 2, 3, 4, & 5) Carlson Products, Inc., is a manufacturer of a variety of construction products, including insulation, pipe, and gypsum. The company has been experiencing steady growth over the past few decades and is moderately profitable. The board of directors at Carlson has developed criteria that all capital budgeting projects undertaken at Carlson must meet in order to be approved: The project’s net present value (NPV) must be positive....

E4-25B. (Learning Objectives 1, 2: Describe fraud and its impact; Explain the objectives and components of...

E4-25B. (Learning Objectives 1, 2: Describe fraud and its impact; Explain the objectives and components of internal control) Identify the internal control weakness in the following situations. State how the person can hurt the company. a. Mandy Morrison works as a security guard at POST parking in Oklahoma City. Morrison has a master key to the cash box where customers pay for parking. Each night Morrison prepares the cash report that shows (a) the number of cars that parked on...

P4-51B. (Learning Objectives 2, 4: Explain the objectives and components of internal control; evaluate internal controls)...

P4-51B. (Learning Objectives 2, 4: Explain the objectives and components of internal control; evaluate internal controls) Each of the following situations reveals an internal control weakness: Situation a. In evaluating the internal control over cash payments of Arlington Manufacturing, an auditor learns that the purchasing agent is responsible for purchasing diamonds for use in the company’s manufacturing process, approving the invoices for payment, and signing the checks. No supervisor reviews the purchasing agent’s work. Situation b. Kelly Hixson owns an...

E11.3 (LO 1, 2 ) (Depreciation Computations—SYD, DDB—Partial Periods) Judds Company purchased a new plant asset...

E11.3 (LO 1, 2 ) (Depreciation Computations—SYD, DDB—Partial Periods) Judds Company purchased a new plant asset on April 1, 2020, at a cost of $711,000. It was estimated to have a service life of 20 years and a salvage value of $60,000. Judds' accounting period is the calendar year. Instructions a. Compute the depreciation for this asset for 2020 and 2021 using the sum-of-the-years'-digits method. b. Compute the depreciation for this asset for 2020 and 2021 using the double-declining-balance method.

Question