Question

Sandhill Co. had the following assets on January 1, 2022.

ItemCostPurchase DateUseful Life
(in years)Salvage Value

Machinery

$79,000Jan. 1, 201210$ 0

Forklift

38,000Jan. 1, 201950

Truck

44,400Jan. 1, 201783,000

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 $12,800. 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. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

choose a transaction date                                                          Jan. 1June 30Dec. 31

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

choose a transaction date                                       Jan. 1June 30Dec. 31

enter an account title to record depreciation expense on forklift

Answer 1

Calculation of Written Down Value of Assets
Description	Purchase Value	Purchase Date	No.of Years	Useful Life	Salvage	Depreciation / Year	Accumulated Depreciation up to 31/12/21	WDV as on 31/12/21
Machinery	79000	01-01-12	9	10	0	7900	71100	7900
ForkLift	38000	01-01-19	2	5	0	7600	15200	22800
Truck	44400	01-01-17	4	8	3000	5175	20700	23700

1	Since Machinery was retired from service on jan 1st 2022, Depreciation should be ceased and
	WDV of the Asset as on Jan 1st has to be written off to Profit & Loss A/c
Date	Description	Debit	Credit
Jan-01	Profit & Loss A/c	7900
	To Machinery A/c		7900
	(Entry passed for disposing the machinery )

2	Forklift Sold for 12800 on June 30
Depreciation to be charged upto June 30 and Profit/ loss to be calculated on the balance amount
Date	Description	Debit	Credit
Jun-30	Depreciation A/c	3800
	To ForkLift A/c		3800
	(Entry passed for Providing Depreciation for half year on ForkLift )
Jun-30	Cash A/c	12800
	Loss on sale of Asset A/c	6200
	To Forklift A/c		19000
	(Being Asset sold for 12800 by incurring a loss of $ 6200)

3	Discard of Truck as on Dec 31st
Deprecaition to be charged upto Dec 31st and balance has to be written off to Profit & Loss
Date	Description	Debit	Credit
Dec-31	Depreciation A/c	5175
	To Truck A/c		5175
	(Entry passed for Providing Depreciation for half year on ForkLift )
Dec-31	Profit & Loss A/c	18525
	To Truck A/c		18525
	(Being Truck discarded as on 31st dec