Question

Presented below are the selected transactions at X company for 2017

Jan 1. Retired a piece of machinery that was purchased on January 1, 2007. The machine costs $75,000 on that date. It had a useful life of 10 years with no salvage value

June 30. Sold a computer that was purchased on Jan 1, 2014. The computer cost $30,000. It had a useful life of 5 years with no salvage value. The computer was sold for $10,500

Dec 31. Discarded a delivery truck that was purchased on Jan 1, 2013. The truck cost $40,000. It was depreciated based on a 6-year useful life with a $4,000 salvage value.

Journalize all entries. Company X uses straight-line depreciation.

Answer 1

Retired a piece of machinery that was purchased on January 1, 2007. The machine costs $75,000 on that date. It had a useful life of 10 years with no salvage value
Date	General journal	Debit	Credit
Jan 1, 2017	Accumulated depreciation - equipment	$           75,000
	Equipment		$        75,000
	To record retired a piece of machinery that was purchased on January 1, 2007.

Computer
Original cost	$        30,000
Less: Salvage value	$                  0
Depreciable cost	$        30,000
Divided by: Useful life	5
Depreciation per year	$          6,000
Multiply: Number of year till Dec 31, 2016 (2014, 2015 and 2016 = 3 years)	3
Accumulated depreciation balance as of Dec 31, 2016	$        18,000
Accumulated depreciation balance as of Dec 31, 2016	$        18,000
Add: Depreciation expense for half year (Jan 1, 2017 to June 30, 2017 = 6 months) (6000*6/12)	$          3,000
Accumulated depreciation balance as of June 30, 2017	$        21,000
Original cost	$        30,000
Less: Accumulated depreciation balance as of June 30, 2017	$        21,000
Book value of computer sold	$          9,000
Cash received from computer sold	$        10,500
Less: Book value of computer sold	$          9,000
Gain on sale of computer	$          1,500

Sold a computer that was purchased on Jan 1, 2014. The computer cost $30,000. It had a useful life of 5 years with no salvage value. The computer was sold for $10,500
Date	General journal	Debit	Credit
June 30, 2017	Depreciation expense	$             3,000
	Accumulated depreciation - equipment		$           3,000
	To record the depreciation expenses on the computer for half year.
June 30, 2017	Cash	$           10,500
	Accumulated depreciation - equipment	$           21,000
	Computer		$        30,000
	Gain on disposal of equipment		$           1,500
	To record computer sold.

Delivery truck
Original cost	$        40,000
Less: Salvage value	$          4,000
Depreciable cost	$        36,000
Divided by: Useful life	6
Depreciation per year	$          6,000
Multiply: Number of year till Dec 31, 2016 (2013,2014, 2015 and 2016 = 4 years)	4
Accumulated depreciation balance as of Dec 31, 2016	$        24,000
Accumulated depreciation balance as of Dec 31, 2016	$        24,000
Add: Depreciation expense for 2017	$          6,000
Accumulated depreciation balance as of Dec 31, 2017	$        30,000
Original cost	$        40,000
Less: Accumulated depreciation balance as of June 30, 2017	$        30,000
Book value of computer sold	$        10,000
Book value of computer sold	$        10,000
Less: cash received from Discarded a delivery truck	$                  0
Loss on disposal of delivery truck	$        10,000

Discarded a delivery truck that was purchased on Jan 1, 2013. The truck cost $40,000. It was depreciated based on a 6-year useful life with a $4,000 salvage value.
Date	General journal	Debit	Credit
Dec 31, 2017	Depreciation expense	$             6,000
	Accumulated depreciation - delivery truck (Equipment)		$           6,000
	To record the depreciation expense on delivery truck for 2017.
Dec 31, 2017	Accumulated depreciation - delivery truck (Equipment)	$           30,000
	Loss on disposal of delivery truck (Equipment)	$           10,000
	Delivery truck (Equipment)		$        40,000
	Discarded a delivery truck that was purchased on Jan 1, 2013.