Question

In: Accounting

ayya Co. purchases a machine for $210,000 on January 1, 2019. Straight-line depreciation is taken each...

ayya Co. purchases a machine for $210,000 on January 1, 2019. Straight-line depreciation is taken each year for four years assuming a seven-year life and no salvage value. The machine is sold on July 1, 2023, during its fifth year of service.
  
Prepare entries to record the partial year’s depreciation on July 1, 2023, and to record the sale under each seperate situation. (1) The machine is sold for $90,000 cash. (2) The machine is sold for $72,000 cash.

Solutions

Expert Solution

Solution:

Annual depreciation on machine = (Cost - Salvage value) / useful life = $210,000/7 = $30,000

Accumulated depreciation for 4 years = $30,000*4 = $120,000

Depreciation for partial year = $30,000*6/12 = $15,000

Accumulated depreciation up to date of sale = $120,000 + $15,000 = $135,000

Journal Entries
Event Date Particulars Debit Credit
1 1-Jul-23 Depreciation expense Dr $15,000.00
         To Accumulated depreciation - equipment $15,000.00
(To record partial year depreciation_
2 1-Jul-23 Cash Dr $90,000.00
Accumulated depreciation - Equipment Dr $135,000.00
         To equipment $210,000.00
         To Gain on sale of equipment $15,000.00
(To record sale of equipment)
3 1-Jul-23 Cash Dr $72,000.00
Accumulated depreciation - Equipment Dr $135,000.00
Loss on sale of equipment Dr $3,000.00
         To equipment $210,000.00
(To record sale of equipment)

Related Solutions

Rayya Co. purchases a machine for $184,800 on January 1, 2019. Straight-line depreciation is taken each...
Rayya Co. purchases a machine for $184,800 on January 1, 2019. Straight-line depreciation is taken each year for four years assuming a seven-year life and no salvage value. The machine is sold on July 1, 2023, during its fifth year of service. Prepare entries to record the partial year’s depreciation on July 1, 2023, and to record the sale under each seperate situation. (1) The machine is sold for $79,200 cash. (2) The machine is sold for $63,360 cash.
Rayya Co. purchases a machine for $100,800 on January 1, 2020.Straight-line depreciation is taken each...
Rayya Co. purchases a machine for $100,800 on January 1, 2020. Straight-line depreciation is taken each year for four years assuming a eight-year life and no salvage value. The machine is sold on July 1, 2024, during its fifth year of service. Prepare entries to record the partial year’s depreciation on July 1, 2024, and to record the sale under each separate situation. (1) The machine is sold for $50,400 cash. (2) The machine is sold for $42,336 cash.
MacBillpurchaseda sowing machine on January 1, 2019. For its sowing machines, MacBilluses straight-line depreciation for financial...
MacBillpurchaseda sowing machine on January 1, 2019. For its sowing machines, MacBilluses straight-line depreciation for financial reporting purposes (US GAAP) and accelerated depreciation for tax purposes. Its useful life is 3 years. Assume income before depreciation is $1,000 in 2019. MacBill has a 30% income tax rate for all years. The depreciation table is as follows: 2019 2020 2021 Straight-Line Depreciation $500 $500 $500 Accelerated Depreciation $850 $450 $200 What is the tax expense on its income statements for the...
Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, Haskins Company purchases a laser cutting machine for...
Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, Haskins Company purchases a laser cutting machine for use in fabrication of a part for one of its key products. The machine cost $120,000, and its estimated useful life is five years, after which the expected salvage value is $7,500. Compute depreciation expense for each year of the machine's useful life under each of the following depreciation methods: Round answers to the nearest whole number, when applicable. a. Straight-line Year 1 $Answer...
Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, Haskins Company purchases a laser cutting machine for...
Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, Haskins Company purchases a laser cutting machine for use in fabrication of a part for one of its key products. The machine cost $112,000, and its estimated useful life is five years, after which the expected salvage value is $7,000. Compute depreciation expense for each year of the machine's useful life under each of the following depreciation methods: Note: Round answers to the nearest whole number, when applicable. a. Straight-line Year 1...
Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, 2016, Fischer Company purchases a machine that manufactures...
Computing Straight-Line and Double-Declining-Balance Depreciation On January 2, 2016, Fischer Company purchases a machine that manufactures a part for one of its key products. The machine cost $529,200 and is estimated to have a useful life of six years, with an expected salvage value of $45,000. Compute depreciation expense for 2016 and 2017 for the following depreciation methods. a. Straight-line. b. Double-declining balance. 2016 2017 Straight-line $Answer $Answer Double-declining Answer Answer need help solving this problem thank you
Nokia purchases equipment for $1,000,000 on January 1, 2014. Nokia uses the straight-line method for depreciation....
Nokia purchases equipment for $1,000,000 on January 1, 2014. Nokia uses the straight-line method for depreciation. Nokia chooses to revaluate its equipment every December 31. Please answer the following questions. (1) On January 1, 2014, the equipment has a useful life of 5 years and its residual value is zero. The fair value of equipment on December 31, 2014 is $950,000. Prepare the necessary journal entries on December 31, 2014. ● (2) On January 1, 2015, the equipment has a...
Bonita Company purchased a computer for $8,720 on January 1, 2019. Straight-line depreciation is used, based...
Bonita Company purchased a computer for $8,720 on January 1, 2019. Straight-line depreciation is used, based on a 5-year life and a $1,090 salvage value. In 2021, the estimates are revised. Bonita now feels the computer will be used until December 31, 2022, when it can be sold for $545. Compute the 2021 depreciation. (Round answer to 0 decimal places, e.g. 45,892.) Depreciation expense, 2021
Eckland Manufacturing Co. purchased equipment on January 1, 2016, at a cost of $90,900. Straight-line depreciation...
Eckland Manufacturing Co. purchased equipment on January 1, 2016, at a cost of $90,900. Straight-line depreciation for 2016 and 2017 was based on an estimated eight-year life and $2,100 estimated residual value. In 2018, Eckland revised its estimate and now believes the equipment will have a total service life of only six years, while the residual value remains the same. Required: Compute depreciation for 2018 and 2019.
Straight-Line Depreciation Irons Delivery Inc. purchased a new delivery truck for $42,000 on January 1, 2019....
Straight-Line Depreciation Irons Delivery Inc. purchased a new delivery truck for $42,000 on January 1, 2019. The truck is expected to have a $2,020 residual value at the end of its 5-year useful life. Irons uses the straight-line method of depreciation. Required: Prepare the journal entry to record depreciation expense for 2019 and 2020. 2019 Dec. 31 Depreciation Expense Accumulated Depreciation (Record straight-line depreciation expense) 2020 Dec. 31 Depreciation Expense Accumulated Depreciation (Record straight-line depreciation expense)
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT