Question

Problem 2: This company's fiscal year is the calendar year. For the following data, it is advisable to set up a “T”-account for each item, with a beginning amount, an ending amount, and any “during the year” activity that takes place.....then, determine the "missing” adjusting entry. In other words, with this starting amount, this ending amount, and the stuff that happens in between, what adjusting entry do I need to take me to the correct ending figure? c) Accumulated Depreciation Equipment at January 1, 2019 was $230,000. At December 31, 2019 it was $280,000. During the year, one piece of equipment was sold. The equipment had an original cost of $40,000 and was 4 (75%) depreciated when sold. Prepare the missing adjusting journal entry.

Answer 1

Accumulated Depreciation - Equipment Date Particulars To Sale of Equipment (40000*75%) Debit $ Date Particulars 30,000 01-Jan-19 By Beginning balance Credits 230,000 31-Dec-19 By Depreciation expense - Equipment 80,000 31-Dec-19 To Ending balance 280,000 310,000 310,000

Credits Adjusting journal entries :- Date Accounts Title & Explanation 31-Dec-19 Depreciation expense - Equipment To Accumulated Depreciation - Equipment (Entry for depreciation expense for the year 2019) Debit 80,000 80,000