Question

Here are selected 2017 transactions of Indigo Corporation.

Jan. 1 Retired a piece of machinery that was purchased on January 1, 2007. The machine cost $61,800 and had a useful life of 10 years with no salvage value. June 30 Sold a computer that was purchased on January 1, 2015. The computer cost $37,000 and had a useful life of 4 years with no salvage value. The computer was sold for $4,000 cash. Dec. 31 Sold a delivery truck for $9,380 cash. The truck cost $23,600 when it was purchased on January 1, 2014, and was depreciated based on a 5-year useful life with a $3,200 salvage value.

Prepare a tabular summary to record all transactions described on the above dates. Update depreciation on assets disposed of, where applicable. Indigo Corporation uses straight-line depreciation. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.)

Answer 1

Answer:

Date	Description	Debit $	Credit $
1-Jan	Accumulated depreciation	61800
	Machine asset		61800
	(being Entry for Retired a piece of machinery at the 10 year end)
30-Jun	Cash	4000
	Accumulated depreciation	23125
	Loss on sale of Machinary	9875
	Computer asset		37000
31-Dec	Cash	9380
	Accumulated depreciation	16320
	Gain on sale of Machinary		-2100
	Truck asset		23600

Working notes

Compute
January 1-2007
Machine cost	37000
Life	4 year
Depriciation Per year	9250
Depriciation till June-30-2017
2015	9250
2016	9250
2017	4625
	23125
Truck
January 1-2007
Machine cost	23600
Salvage	3200
Life	year
Depriciation Per year	4080
Depriciation till June-30-2017
2014	4080
2015	4080
2016	4080
2017	4080
	16320