Question

Ch 9 Manual HW Handout 1. Presented here are selected transactions for Snow Company for 2018. Jan. Retired a piece of machinery that was purchased on January 1, 2008. The machine cost 1 $71,000 on that date and had a useful life of 10 years with no salvage value. June Sold a computer that was purchased on January 1, 2015. The computer cost $30,000 and 30 had a useful life of 5 years with no salvage value. The computer was sold for $12,000. Oct Discarded a delivery truck that was purchased on April 1, 2013. The truck cost $33,400 and 31 was depreciated based on an 8-year useful life with a $3,000 salvage value. Instructions: Journalize all entries required on the above dates. Snow Company uses straight-line depreciation (Assume depreciation is up to date as of December 31, 2017 and company operates on a calendar year.) Tips: Determine how much depreciation would have been recorded at the time of the disposal (update ledger t-accounts to the point in time). A vecember 31, 2018. Rivera Corporation reported the following plant assets Lana Buildings $ 3,000,000 $26.500,000 Lass: Accumulated depreciation-buildings 11,925,000 14,575,000 Equipment 40,000,000 Less: Accumulated depreciation-equipment 5.000.000 35.000.000 Total plant assets $52,575,000 During 2019, the following selected cash transactions occurred. Apr. 1 Purchased land for $2,200,000. May Sold equipment that cost $600.000 when purchased on January 1, 2012 The equipment was sold for $170,000. June 1 Sold land for $1,600,000. The land cost $1,000,000 July 1 Purchased equipment for $1,100,000. Dec. 31 Retired equipment that cost $700,000 when purchased on December 31. 2009. No salvage value was received. - Instructions (a) Journalize the transactions. (Hint: You may wish to set up T accounts, post begin ning balances, and then post 2019 transactions.) Rivera uses straight-line deprech- ation for buildings and equipment. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to have a 10-year use- ful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement (b) Record adjusting entries for depreciation for 2019 Hit - Assume all Egipat (0) Prepare the plant assets section of Riveral balance sheet at December 31, 201. deprecia full yeu

Answer 1

Answer to Question 1. Credit Debit 71,000 71,000 3,000 3,000 12,000 21,000 Date Account Titles and Explanation Jan 1, Accumulated Depreciation 2018 Equipment (To record Machinery retired) June 30, Depreciation Expense 2018 Accumulated Depreciation (To record Depreciation expense for the year) June 30, Cash 2018 Accumulated Depreciation Equipment Gain on Sale of Equipment (To record Computer sold) Oct 31, Depreciation Expense 2018 Accumulated Depreciation (To record Depreciation expense for the year) Oct 31, Loss on disposal of Equipment 2018 Accumulated Depreciation Equipment (To record truck disposed) 30,000 3,000 3,167 3,167 12,183 21,217 33,400

Calculation:
January 1:
As the Machinery was purchased on January 1, 2008 and the useful life of machinery is 10 years. Therefore, till January 1, 2018, the full value of machinery is depreciated.

June 30:
Straight Line Depreciation per year = (Cost - Salvage Value) / Useful Life
Straight Line Depreciation per year = ($30,000 - $0) / 5
Straight Line Depreciation per year = $6,000

Depreciation for the period ended June 30, 2018 = $6,000 * 6/12
Depreciation for the period ended June 30, 2018 = $3,000

Depreciation of Equipment till the date of Sale = $6,000 * 3.5 years
Depreciation of Equipment till the date of Sale = $21,000

October 31:
Straight Line Depreciation per year = (Cost - Salvage Value) / Useful Life
Straight Line Depreciation per year = ($33,400 - $3,000) / 8
Straight Line Depreciation per year = $3,800

Depreciation for the period ended October 31, 2018 = $3,800 * 10/12
Depreciation for the period ended October 31, 2018 = $3,167

Depreciation of Equipment till the date of discard = ($3,800 * 9/12) + ($3,800 * 4) + $3,167
Depreciation of Equipment till the date of discard = $21,217