How to obtain the accumulated depreciate - Training equipment = $34,100?
How to balance the adjusted trail balance?
On 1 October, Hercules Ho sold a treadmill that costs $5,000,
with accumulated depreciation of $2,000 as at 31 Dec 2017 for cash
of $3,000. Hercules Ho deposited the cash into his personal bank
account. Hercules Ho forgot to inform his accountant of this
transaction. According to him, the cash taken by him was to be
treated as a loan to him.
Both the cost of the treadmill and the accumulated depreciation
were included in the amount shown for training equipment at cost
and the accumulated depreciation for training equipment in the
unadjusted trial balance above. The residual value of the treadmill
was originally estimated to be $500.
No depreciation has been charged for the year ended 31 Dec 2018.
During the year, no additional non-current assets was purchased.
The company depreciates non-current assets held at 31 Dec 2018 as
follows:
Training equipment at cost - straight line over five years. The
residual value of the training equipment at cost was estimated to
be $15,000.
Account | Unadjusted Trial Balance | Adjusted Trial Balance | ||
Dr. ($) | Cr. ($) | Dr. ($) | Cr. ($) | |
Share capital | 125,000 | 125,000 | ||
Retained earning, 31 Dec 2017 | 24,688 | 24,688 | ||
Training equipment at cost | 125,000 | 120,000 | ||
Furniture and fittings at cost | 50,000 | 50,000 | ||
Accumulated deperation, 31 Dec 2017 | ||||
- Training equipment | 15,000 | 34,100 | ||
-Furniture and fittings | 10,000 | 30,000 | ||
Prepaid insurance | 9,000 | 9,000 | ||
Rental expense | 162,500 | 162,500 | ||
Insurance expense | 6,750 | 6,750 | ||
Membership fee received | 302,113 | 296,988 | ||
Unearned membership fees | 5,125 | |||
General expenses | 5,090 | 5,090 | ||
Bad debt expense | ||||
Wages and salaries | 49,850 | 52,338 | ||
Wages and salaries payable | 2,488 | |||
Depreciation expense | 41,775 | |||
Equipment maintenance expense | 13,580 | 13,580 | ||
Interest and bank charges | 110 | 210 | ||
Allowance for doubtful debts | 195 | 577 | ||
Accounts receivable | 7,643 | 7,261 | ||
Accounts payable | 3,125 | 3,125 | ||
Hercules Ho capital | 3,000 | |||
Bank | 50,208 | 50,108 | ||
479,926 | 479,926 | 522189 | 521,514 |
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Sold Trademill | |||
Depreciation for 9 Months ($5,000-$500)/5 Years*9/12 | $ 675 | ||
Accumulated Depreciaton up to 31st Dec 2016 | $ 2,000 | ||
Accumulated Depreciation to be reversed | $ 2,675 | ||
Balance of Equipment | |||
Training Equipment Cost (From Trial) | $125,000 | ||
Less: Sold | $ -5,000 | ||
Remaining Equipment | $120,000 | ||
Salvage Value ($15,000-$500 Sold Equipment) | $ 14,500 | ||
Depreciation for the Year ($120,000-$14,500)/5 Year | $ 21,100 | ||
Deprecation for 9 Months on Sold Equipment | $ 675 | ||
Total Accumulated Depreciation to be added | $ 21,775 | ||
Beginning balance of Acc Dep | $ 15,000 | ||
Add: Depreciation for the year | $ 21,775 | ||
Less: Depreciation to be reversed on sold equipment | $ -2,675 | ||
Ending balance of Acc dep | $ 34,100 |
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