Question

8A-4. PEACH Winery purchased a wine 20x1. The press has a useful life of eight years and no salvage end of the time. PEACH makes all the appropriate adjusting December 31 of each year using straight line depreciation. Mo years later, on May 1, 20x5, PEACH press for $120,000 on January 1, value at the entries on re than four sells the press for $32,000 cash. Required x5 1. Calculate the accumulated depreciation on the press as of January 1, 20 and enter this as the beginning balance in the accumulated depreciation T- account. Then show the adjusting entries necessary to bring the depreciation up to date as of May 1 of the same year. 2. Show the entry necessary to record the sale of the press on May 1, 20x5. 8A-5. Redo problem 8A-4. In this case assume that on May 1, 20x5, PEACH cost $61,000 if there had not been a trade-in. Required exchanges the old press plus $32,000 cash for a new press which would have I. Calculate the accumulated depreciation on the press as of January 1, 20x5 and enter this as the beginning balance in the accumulated depreciation T- account. Then show the adjusting entries necessary to bring the depreciation up to date as of May 1 of the same year. (This step of the problem is the same as what you have already done for part 1 of 8A-4 above. I have you repeat it here in case you do not have your answers available when you do this problem. If you do have them, you may just copy them in order to do the next part of the problem regarding the exchange.) 2. Show the entry necessary to record the exchange on May 1, 20x5. 8A-6. Redo problem 8A-5. In this case assume that PEACH exchanges the old press plus $19,000 cash for a new press which would have cost there had not been a trade-in. $88,000 if

Answer 1

Dr		Provision for dep.			Cr
Date	part	amt	Date	part	amt
			1-1-20x5	By b/d	60000

120000*4/8 =60000

1-May	Depreciation a/c		5000
		To Wine press	5000
1-May	Cash a/c		32000
	loss a/c		23000
		To Wine press	55000

8A-5)

1-may

Depreciation a/c		5000
	To Wine press	5000

1-May	Wine press		61000
	Loss		26000
		To Wine press	55000
		To bank	32000

8A-6)

1-May	Depreciation a/c		5000
		To Wine press	5000

1-May	Wine press		88000
		To Wine press	55000
		To bank	19000
		To Gain	14000