Question

On January 2, 2017, Loved Clothing Consignments purchased showroom fixtures for $19,000 cash, expecting the fixtures to remain in service for five years. Loved has depreciated the fixtures on a double-declining-balance basis, with zero residual value. On October 31, 2018, Loved sold the fixtures for $8,200 cash. Record both depreciation expense for 2018 and sale of the fixtures on October 31, 2018. (Record debits first, then credits. Select the explanation on the last line of the jounal entry table. Note that 2017 depreciation was recorded and posted in 2017.) Begin by recording the depreciation expense for January 1, 2018 through October 31, 2018. Date Accounts and Explanation Debit Credit Oct. 31 Accumulated Depreciation-Fixtures Book value Cash Depreciation Expense-Fixtures Choose f Fixtures ck Answer ? Gain on Disposal parts Loss on Disposal remai 2 nswer Maintenance Expenses

Answer 1

Solution:

Depreciation rate - SLM = 1/5 = 20%

Depreciation rate - DDB = 20%*2 = 40%

Depreciation expense for 2017 = $19,000*40% = $7,600

Book value at the end of 2017 = $19,000 - $7,600 = $11,400

Depreciation expense for 2018 = $11,400 * 40%*10/12 = $3,800

Journal Entries - Loved Clothing
Date	Particulars	Debit	Credit
31-Oct	Depreciation Expense - Fixtures Dr	$3,800.00
	To Accumulated Depreciation - Fixtures		$3,800.00
	(To record depreciation expense)
31-Oct	Cash Dr	$8,200.00
	Accumulated Depreciation - Fixtures Dr	$11,400.00
	To Fixtures		$19,000.00
	To Gain on disposal		$600.00
	(To record sale of Fixtures)