Question

Presented here are selected transactions for Pharoah Limited for 2018. Pharoah uses straight-line depreciation and records adjusting entries annually.

Jan. 1		Sold a delivery truck for $18,910 cash. The truck cost $67,900 when it was purchased on January 1, 2015, and was depreciated based on a four-year useful life with a $6,080 residual value.
Sept. 1		Sold computers that were purchased on January 1, 2016. They cost $11,754 and had a useful life of three years with no residual value. The computers were sold for $470 cash.
Dec. 30		Retired equipment that was purchased on January 1, 2009. The equipment cost $135,800 and had a useful life of 10 years with no residual value. No proceeds were received.

Record the above transactions.

Answer 1

Credit Date Account Titles and Explanation Jan.1,2018 Cash Accumulated Depreciation - Delivery Truck Loss on sale of Delivery Truck Delivery Truck (To record sale of Delivery truck) Debit $ 18,910 $ 46,365 $ 2,625 $ 67,900 Sep. 1 $ 2,612 Depreciation Expenses Accumulated Depreciation - Computers (To record depreciation to date of sale) $ 2.612 Cash Accumulated Depreciation - Computers Loss on sale of Computers Computers (To record sale of Computers S 470 $ 10,448 S 836 $ 11,754 $ 135,800 Dec.31 |Accumulated Depreciation - equipment Equipment (To record retirement of equipment) $135,800

Jan. 1 Working Notes: Depreciation Expenses =($67,900-$6,080)/4 = $15,455 Accumulated Depreciation as on january 1, 2018= $15,455*3 = $46.365 Loss on sale of Delivery Truck = $67,900-$46,365-$18.910 = $2,625 Sep. 1 Depreciation Expenses = ($11.754-0)/3 = $3,918*8/12 = $2,612 Accumulated Depreciation = $3,918*2 +$2,612 = $10,448 Loss on sale of Computers = $11,754 -$10,448 -$470 = $836