Question

The property, plant, and equlpment section of the Jasper Company's December 31, 2017, balance sheet contalned the following: Property, plant, and equipment $113,000 Land $ 858,000 (165,000) Euilding Less: Accumulated depreciation 693,000 Equipment Less: Accumulated depreciation 155, 200 Total property, plant, and equipment The land and bullding were purchased at the beginning of 2013. Stralght-line depreclation Is used and a residual value of $33,000 for the bullding Is anticipated. The equipment Is comprised of the following three machines: Residual Life in Date Acquired 1/1/15 6/30/16 9/1/17 Machine Cost Value Years $51,100 6,300 101 102 82,000 7,300 103 22,100 2,300 8 The stralght-line method is used to determine depreclation on the equlpment. On March 31, 2018, MachIne 102 was sold for $56,500 Early In 2018, the useful life of machine 101 was revised to five years In total, and the residual value was revised to zero. Required: 1. Calculate the accumulated depreclatlon on the equlpment at December 31, 2017 2. Prepare the Journal entry to record 2018 depreclation on machine 102 up to the date of sale. 3. Prepare a schedule to calculate the galn or loss on the sale of machine 102 4. Prepare the Journal entry for the sale of machine 102. 5. Prepare the 2018 year-end journal entries to record depreclation on the bulding and equipment

Answer 1

1.) Calculation of accumulated depreciation on the equipment at December 31, 2017

- Particulars 1. 2. 3. 4. Machine Cost ($) Date scrap life loi 31,100 1111115 6,300 | 818 102 82,000 6/30/16 7,300 9 I 103 22,100 ajilin/2300/8 5. = 1.-3. Depreciation (Annual) 5,600 8,300 | 19,900 Depreciation - Cost - scrap value Чumbя о сам Depreciation at the December 31, 2017 Machine | Time period Accumulated Depreciation 101 I g 2 years 5,600x2 = 11,200 102 1/2 years 8,300 x 105 = 12,450 103 umonths | 19,8oox 9/12 = 6,600 30,250 Total Accumulated Depreciation for the equipment on 31 dec 2017 = $30,250

2.) Accumulated Depreciation on 31, Dec 2017 = $12,450

Depreciation from 31 Dec 2017 to 31,March 2018 (for 3 months) = 8,300 x 3/12 = $2075

We are assuming that entry for accumulated depreciation of $12,450 has been made on 31, Dec 2017. We will make an entry for the amount of 3 months only for 2018

Depreciation A/c       .......Dr    2,075

   To Accumulated Depreciation A/c    2,075

(being depreciation for 3 months transferred to Accumulate depreciation A/c)

3) Calculation of gain/loss on the sale of machine102

Particulars Amount ($) Cost of machine 102 | 82,000 ☺ Accumulated depreciation (14,525) Book Valul 67,475 Sales value (56,500) Loss on sale 1o975 Book value > sales values & Loss

4.) Accumulated depreciation A/c ......Dr 14,525

To Equipment A/c    14,525

(being accumulated depreciation charged to Equipment A/c)

Bank A/c . .......Dr   56,500

Loss on sale A/c     .......Dr     10,975

To Equipment A/c     67,475

(being a part of equipment sold)