Question

In: Accounting

March 11 Morgan Hartley invested an additional $5,000 into the business. April 1 Disposed of a...

March 11 Morgan Hartley invested an additional $5,000 into the business.

April 1 Disposed of a cash register (Store Equipment) originally costing $675 with a $75 salvage value

Depreciation is computed on a monthly basis with adjusting entries made at the end of each year.

Depreciation after eight years of use was $480 as of December 31. The cash register had an estimated life of 10 years.

Solve and Journalize.

Expert Solution

Cost of store equipment = $625

Salvage value = $75

Useful life = 10 year

Annual depreciation = (Cost price - Salvage value)/Useful life

(675 - 75)/10

= 600/10

$60

Depreciation on equipment from January 1 to April 1 of the current year = 60 x 3/12

= $15

Accumulated depreciation on equipment till the date of sale = 480 + 15

= $495

Book value of equipment = Cost price - accumulated depreciation

= 675 - 495

= $180

Loss on equipment disposed = Book value of equipment

= $180

Journal

Date	Account Title and Explanation	Debit	Credit
Mar. 11	Cash	5,000
	Capital, Morgan Hartley		5,000
	(To record additional investment made by owner)
Apr. 1	Depreciation expense	15
	Accumulated depreciation - Equipment		15
	(To record depreciation expense upto April 1)
Apr. 1	Loss on disposal	180
	Equipment		180
	(To record loss on disposal of equipment)

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