Question

Problem 9-3A Sandhill Co. had the following assets on January 1, 2017. during 2017 each of the assets was removed from service the machinery was retired on January 1 the forklift for sold on June 30 for $13,920 the truck was discarded on December 31

Problem 9-3A Sandhill Co. had the following assets on January 1, 2017. Useful Life (In years) Item Machinery Forklift Truck Salvage Value $ 0 Cost $82,360 34,800 38,744 Purchase Date Jan 1, 2007 Jan 1, 2014 Jan. 1, 2012 3,480 During 2017, each of the assets was removed from service. The machinery was retired on January 1. 31. Journalize all entries required on the above dates, including entries to update depreciation, where ap depreciation was up to date as of December 31, 2016. (Credit account titles are automatically in required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 1 Accumulated Depreciation-Equipment 82360 82360 Equipment June 30 Depreciation Expense Accumulated Depreciation Equipment (To record depreciation expense on forklift) June 30 Cash nullare con uno

Answer 1

Working Notes: Depreciation (Cost - Salvage) / Life of asset Depreciation on Forklift = = ($34800 - 0) /5 $ 6,960.00 per year As it was sold on June 30, Depreciation till June 30 Year Depreciation 2014 6960 2015 6960 2016 6960 2017 (half) 3480 Accumulated Dep: 24360 Value of asset as on date (30th June, 2017) Original Cost less: Accumulated Dep. Value of Asset (June 30, 2017) 34800 24360 10440 Profit on Selling forklift: Sales consideration less: Value of Asset Net profit 13920 10440 3480 Depreciation on Truck = (Cost - Salvage) / Life of asset ($38744 - $3480) / 8 $ 4,408.00 per year Accumulated dep on Truck on 31 Dec 2017 Year Depreciation 2012 4408 2013 4408 2014 4408 2015 4408 2016 4408 2017 4408 Accumulated Dep: 26448 Value of Truck on 31st Dec, 2017 = $38744 - $26448 = $ 12,296.00

Credit Date Jan 1 $ 82,360 June 30 $ 3,480 June 30 Journal Entries in the Books of Sand Hill co. Description Debit Accumulated Dep-Equipment $ 82,360 Equipment (to record disposal of Machinery) Depreciation Expense $ 3,480 Accumulated Depreciation -Equipmer (To record depreciation expense on forklift) $ 13,920 Accumulated Depreciation - Equipment $ 24,360 Profit on sale of forklift Equipment (To record sale of forklift) Depreciation Expense $ 4,408 Accumulated Depreciation - Vehicle (To record depreciation expense on Truck) Accumulated Dep-Vehicle $ 26,448 Loss on disposal of Truck $ 12,296 Vehicle (To record disposal of Truck) $ 3,480 $ 34,800 Dec 31 $ 4,408 Dec 31 $ 38,744

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