Question

needing help understanding where certain numbers go.

Tell me I Home Insert Draw Page Layout Formulas Data Review View X Arial 10 - A A Paste B Av $ % 9 Conditional Format Formatting Tables Format A3 Xfx A company purchases an asset on January 1, 2017 which costs 90,000. The company signs a note to pay for the asset. It has a 4 year and 10,000 salvage с D K M N Problem 3 There are 4 dates which need anties on this sheet 3 compare purchases an aston January 1, 2017 which costs 90,000. The company is a note to pay for the set it has a 4 your ite and $10,000 salvage value. The company was wir tepalo 4 The asset sold on June 30, 2019 for $31,000 E F H L O P 5 Prepare entries on the following dates, regarding the asset 2 19 19 12 1201/12 1221118 10 17 18 19 20 21 22 23 24 25 28 6/30/19 You will need 2 entries here 28 20 30 31 32 35 36 37 38 40 Problem 3 Problom 4 + Edit

Answer 1

Prepare entries on the following dates, regarding the asset? Answer: Date Account titles and explanation Debit Credit 01-01-2017 Asset a/c $ 90,000.00 To Note payable a/c $ 90,000.00 (Being asset purchased through note) Explanation: As per the real accounts principle debit what comes in and credit what goes out. Here asset comes in and note goes out. Real accounts are assets, liabilities and equity. The note shall be payable after a certain period. 31-12-2017 Depreciation a/c $ 20,000.00 To Asset a/c $ 20,000.00 (Being depreciation for 1st year recorded) Explanation: Depreciation represents the reduction in the value of the asset due to wear and tear, obsolescence, etc. As per nominal accounts principle expenses and losses are debited and incomes and gains are credited. As they have mentioned straight line method it means that that the asset is depreciated equally over the period of time. Depreciation = (90,000 - 10,000)/4. Here in the above formula salvage value will be reduced from the cost of the asset while computing depreciation.

31-12-2018 Depreciation a/c $ 20,000.00 To Asset a/c $ 20,000.00 (Being depreciation for 2nd year recorded) Explanation: Depreciation will be same in straight line method hence $20,000. 30-06-2019 Depreciation a/c $ 10,000.00 To Asset a/c $ 10,000.00 (Being depreciation for 6 months recorded) Explanation: Depreciation will be charged for the time used. Here it is used for 6 months hence, half of the depreciation will be charged. 30-06-2019 Cash a/c $ 31,000.00 Loss on Sale of Asset a/c $ 9,000.00 To Asset a/c $ 40,000.00 (Being asset sold at loss of 9,000) Explanation: At date 30-June-2019 asset value after depreciation is $40,000 and the sale value is $31,000. Hence a loss of $9,000 will be recorded as expense during the year. If you need any further explanation, kindly request in the comment section, glad to be helpful.