Question

Pharoah Company had the following assets on January 1, 2022. Useful Life (in years) Item Cost Purchase Date Salvage Value Machinery $75,000 Jan. 1, 2012 10 $0 Forklift 34,000 Jan 1, 2019 5 0 Truck 40,400 Jan 1, 2017 3,000 During 2022, each of the assets was removed from service. The machinery was retired on January 1. The forklift was sold on June 30 for $12,400. The truck was discarded on December 31. Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on disposed assets. The company uses straight-line depreciation. All depreciation was up to date as of December 31, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 14

Answer 1

Pharoah Company Journal Enteries Date Particulars 1.1.2022 Accumulated Depre - Mach. a/c Dr. To Machinery (Machinery retired) 75000 x 10/10 Debit in $ Credit in $ 75000 75000 30.6.2022 Depreciation Expense - Fork Lift a/c Dr. 3400 To Accum. Depre - Fork Lift (To record depreciation) 34000 / 5 = 6800 x 1/2 = 3400 3400 Cash a/c Dr. 12400 Accumulated Depre - Fork Lift a/c Dr. 23800 To Fork Lift To Gain on sale (Forklift sold) 6800 x 3 = 20400 + 3400 = 23800 34000 2200 31.12.2022 Depreciation Expense - Truck a/c Dr. 4675 To Accum. Depre - Truck (To record depreciation)( 40400 - 3000 ) / 8 = 4675 4675 Accumulated Depre - Truck a/c Dr. 28050 Loss on Disposal a/c 12350 To Truck (Truck discarded) 4675 x 5 = 23375 +4675 = 28050 40400