Question

please show all the calculations

Q1. (25 marks) Danish Inc purchased a computer on January 1, 2019, for $1,600,000. The straight-line method of depreciation was used, based on an expected life of 6 years and a residual value of $130,000. Prepare the journal entries to record depreciation for the first 6 months of 2021 and the sale of the computer on July 1, 2021, for $1,000,000.

Answer 1

Date	Particulars	Debit	Credit
01-01-2019	Computer A/c	16,00,000.00
		Bank		16,00,000.00
31-12-2019	Depreciation A/c	2,45,000.00
		Accumulated Depreciation		2,45,000.00
31-12-2020	Depreciation A/c	2,45,000.00
		Accumulated Depreciation		2,45,000.00
01-07-2021	Depreciation A/c	1,22,500.00
		Accumulated Depreciation		1,22,500.00
01-07-2021	Bank		10,00,000.00
	Accumulated Depreciation	6,12,500.00
		Profit & Loss (Profit on Sale)		12,500.00
		Computer A/c		16,00,000.00
Working Notes :
	1 ) Calculation of Dereciation
	Depreciation = (1,600,000-130,000)/6	2,45,000.00
	2 ) Calculation of Loss on Sale
		Cost	16,00,000.00
		Less : Accumulated Dep (245000+245000+122500)	(6,12,500.00)
		Less : Selling Price	(10,00,000.00)
		Profit on Sale	(12,500.00)