Presented here are selected transactions for Snow Company for 2012.Jan. 1Retired a piece of machinery that was purchased on January 1, 2002. The machine cost $66,300 on that date and had a useful life of 10 years with no salvage value.June 30Sold a computer that was purchased on January 1, 2009. The computer cost $31,200 and had a useful life of 5 years with no salvage value. The computer was sold for $12,480.Dec. 31Discarded a delivery truck that was purchased on January 1, 2007. The truck cost $53,000 and was depreciated based on an 8-year useful life with a $6,300 salvage value.Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on assets disposed of. Snow Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2011.)
Jan. 1 Retired a piece of machinery that was purchased on January 1, 2002. The machine cost $66,300 on that date and had a useful life of 10 years with no salvage value. After 10 years the machinery is fully depreciated. Dr Accumulated Depreciation--Machinery 66,300 Cr Machinery 66,300 June 30 Sold a computer that was purchased on January 1, 2009. The computer cost $31,200 and had a useful life of 5 years with no salvage value. The computer was sold for $12,480. Six months of depreciation has accumulated since the beginning of the year. 31,200 / 5 x 6/12 = $3,120 to update depreciation Dr Depreciation Expense--Computer 3,120 Cr Accumulated Depreciation--Computer 3,120 31,200 / 5 x 3 1/2 = 21,840 total accumulated depreciation at time of sale Dr Cash 12,480 Dr Accumulated Depreciation--Computer 21,840 Cr Computer 31,200 Cr Gain on Sale of Computer 3,120 Dec. 31 Discarded a delivery truck that was purchased on January 1, 2007. The truck cost $53,000 and was depreciated based on an 8-year useful life with a $6,300 salvage value. (53,000 - 6,300) / 8 = $5,837.50 to update depreciation Dr Depreciation Expense--Truck 5,837.50 Cr Accumulated Depreciation--Truck 5,837.50 5,837.50 x 6 = 35,025 total accumulated depreciation at time of sale Dr Accumulated Depreciation--Truck 35,025 Dr Loss on Disposal 17,975 Cr Truck 53,000
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