In: Accounting
Office equipment was purchased on January 2, 2006 for $170,000, with an estimated life of 8 years and a residual value of $10,000. It is sold on June 30, 2012 for $60,000 cash. (Assume all appropriate entries for depreciation had been made for the first six years of use - 2006 through 2011, but not for the half year in 2012.) Journalize the following entries:
(a) Journalize the depreciation for the one-half year prior to the sale, using the straight-line method.
(b) Journalize the sale of the equipment.
Format: Use the Chart of Accounts to enter correct account name. Enter debits and credits as whole numbers WITH COMMAS, but NO DECIMALS OR DOLLAR SIGNS!
Date |
Account Name |
Debit |
Credit |
June 30 |
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Straight line depreciation
= ( cost – Residual value ) / useful life of the asset
= ( 170000 - 10000 ) / 8
= $ 20000 per year
For half year = 20000/2
= $ 10000
Depreciation provided for 6.5 years ( from 2006 - 2012 ) = 6.5 * 20000
= $ 130000
Accumulated Depreciation = $ 130000 ( at the time of Sale )
a)
Date | Accounts Name | Debit | Credit |
a | |||
12/31/2011 | Depreciation | 20000 | |
Accumulated Depreciation | 20000 | ||
6/30/2012 | Depreciation | 10000 | |
Accumulated Depreciation | 10000 |
b)
Date | Accounts Name | Debit | Credit |
b) | Sale of asset | ||
Cash | 60000 | ||
Accumulated depreciation | 130000 | ||
Asset | 170000 | ||
gain on Asset disposal | 20000 |