Question

On January 2, 2017, Snug Clothing Consignments purchased showroom fixtures for $12,000 cash, expecting the fixtures to remain in service for five years. Snug has depreciated the fixtures on a double-declining-balance basis, with zero residual value. On September 30, 2018, Snug sold the fixtures for $6,500 cash. Record both depreciation expense for 2018 and sale of the fixtures on September 30, 2018. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Note that 2017 depreciation was recorded and posted in 2017.) Begin by recording the depreciation expense for January 1, 2018 through September 30, 2018. Date Accounts and Explanation Debit Credit Sep. 30 Accumulated Depreciation—Fixtures Book value Cash Depreciation Expense-Fixtures Fixtures Gain on Disposal Loss on Disposal Maintenance Expenses

Answer 1

Answers Jounal Envies in the books of snug clothing consignments : Given, Cost of Fixtures $ 12000 Useful Life 5 years Nil Salvage Value method of Depreciation Double Dec/1910, Balance Calculation of Depreciation Expense It is given that, snug construction company uses double declining balance method of Depreciation Under Double Declining Balance Method, Depreciation is calculated by : Depreciation - Book Value of . Double Declinin - Asset at the begi- ^ Rate of ning of fiscal year Depreciation Double Declining Rate of depreciation x Straight line Method X100 Rate of Depreciation. : 2 x . 5 years - 40% Depreciation for 2017 • 12000 x 40% = $4800 Depreciation for 2018 - upto Sept. 30. 2018 (12000 -4800) X 40% X $2160

Ale DEC Depreciate | 4800 2017 Sept: 2018 Toyoq) EDC in the bool of sow (ostre company Parlialas Debit ($) Clit L - D 4800 To Accumulate Opprecation (Being to record depreciation exproso for the year 2017 on fixby ) Depreciation Ne D 2100 - To 2160 Accumulytes Depreciation Ale (Being to read depreciation on fixtune, upto the date of Sale) cash Ale – Dr 6500 Acumulated Depreci917- N D r 6960 To Fixte, Ald — 12000 To Gain on sale of Fixtures 1460 Being to record sale of fixture, and gain on sale) To tyl 20470 20420 Sept 39 2018 2. - Computation of cost of Goodwill prchased by mincess and purchait of kate by Princess I cost of Goodwill purchase by process Purchase pace to acquire kale 7000000 Market value of kale's Asset 15000,000 - Market value of kate's Liabilitles 10000000 - Market value of legbe's Net Assets L (5009000) Goodwill 2000000 2. Tovenal Entry to record purchase of Kabe by Princess Assets Alca - pr. 15909,000 Goodwill Ac - DY 2000000 - To Liabilities Ala To Cash Ale (Being to record purchase of Kabe's Company by princess with Goodwill.) 10000000 7000000