Question

Jackson Company’s records show the following property acquisitions and disposals during the first two years of operations.

Year	Acquisition Cost of Property	Estimated Useful Life (Years)	Disposals Amount
2020	$70,000	10	--
2021	28,000	10	$9,800*

*Disposal relates to property acquired in 2020

Property is depreciated for one-half year in the year of acquisition. Property disposed of is depreciated for one-half year in its year of disposal. Assume no residual values. There are no sale proceeds upon retirement.

a. Compute depreciation expense for 2020 and for 2021, and the balances of the property and related accumulated depreciation accounts at the end of each year under the straight-line method.

	For the Period	End of Period
Reporting Period	Depreciation Expense	Property	Accumulated Depreciation
2020	Answer	Answer	Answer
2021	Answer	Answer	Answer

b. Prepare entries for the acquisition, periodic depreciation, and retirement of the property assuming the straight-line method.

Date	Account Name	Dr.	Cr.
Jan. 1, 2020	AnswerCash, Payables, etc.InventoryPropertyBuildingEquipmentAccumulated DepreciationCost of Oil ReserveRetained Earnings—Prior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer
	AnswerCash, Payables, etc.InventoryPropertyBuildingEquipmentAccumulated DepreciationCost of Oil ReserveRetained Earnings—Prior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer
	To record property acquisition.
Dec. 31, 2020	AnswerCash, Payables, etc.InventoryPropertyBuildingEquipmentAccumulated DepreciationCost of Oil ReserveRetained Earnings—Prior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer
	AnswerCash, Payables, etc.InventoryPropertyBuildingEquipmentAccumulated DepreciationCost of Oil ReserveRetained Earnings—Prior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer
	To record depreciation.
Jan. 1, 2021	AnswerCash, Payables, etc.InventoryPropertyBuildingEquipmentAccumulated DepreciationCost of Oil ReserveRetained Earnings—Prior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer
	Cash, Payables, etc.	Answer	Answer
	To record property acquisition.
Dec. 31, 2021	AnswerCash, Payables, etc.InventoryPropertyBuildingEquipmentAccumulated DepreciationCost of Oil ReserveRetained Earnings—Prior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer
	AnswerCash, Payables, etc.InventoryPropertyBuildingEquipmentAccumulated DepreciationCost of Oil ReserveRetained Earnings—Prior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer
	To record depreciation.
Dec. 31, 2021	AnswerCash, Payables, etc.InventoryPropertyBuildingEquipmentAccumulated DepreciationCost of Oil ReserveRetained Earnings—Prior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer
	Accumulated Depreciation	Answer	Answer
	AnswerCash, Payables, etc.InventoryPropertyBuildingEquipmentAccumulated DepreciationCost of Oil ReserveRetained Earnings—Prior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer
	To record disposal.