Question

In: Accounting

Start by recording depreciation expense on the fixtures for 2017. ?(Record debits? first, then credits. Exclude...

Start by recording depreciation expense on the fixtures for

2017.

?(Record debits? first, then credits. Exclude explanations from any journal? entries.)

Before we record the sale of the? fixtures, let's compute the gain or loss on the disposal of the fixtures. Begin by determining the formula needed to calculate the gain or loss and then complete the calculation to determine the amount

Now record the sale of the fixtures on

September 30September 30?,

20172017

assume that on January 2, 2016, vincent Furniture purchase fixtures for$8,500 cash, expecting the fixtures to remain in service for five years. Vincent has depreciated the fixtures on a douple-declining-balance basis, with$1,600 estimated residual value. on September 30,2017, vincent sold the fixtues for $2,400 cash.

Requirement: 1- Record boththe depreciation expence on the fixtures for 2017 and the sale of the fixtures . apart from your journal entry, also show how to compute the gain or loss on Vincent's disposal of these fixtures.

Expert Solution

1. Furniture Dr. 8500

To Cash Cr. 8500

(On purchase of furniture with cash)

2. Depreciation Dr. 2,760

To Furniture Cr. 2760

(Being depreciation on fixed asset under double declining method for 2016)

3.

Depreciation Dr. 1,398

To Furniture Cr. 1398

(Being depreciation on fixed asset under double declining method for 9 months till 30th september'17)

4. Cash Dr. 2400

Loss od Sale of asset Dr. 1942

To Furniture Cr. 4342

(Sale of Furniture and recognition of loss on sale)

Calcualtion of Double Declining Depreciation rate:

Step One: Calculation of salvage value as a percentage

= 1600 * 100 /8500 = 18.82%

Step Two: Depreciation rate under streight line method

= (1 - 1*18.82%) *100 / 5 (Life of asset) = 16.23%

Step Three: multiply with 2 to make it double declining method

= 16.32% * 2 = 32.47%

Calcualtion of Loss:

1. Sale Price 2,400

2. Current cost of FUrniture

Purchase Price 8500

Less: Deprecaition 2016 2,760

Less: Depreciation 2017 (till Sep)

1398

4342

(Loss) of Sale of Furniture (1,942)

ekkarill92 answered 1 year ago

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