Question

the old shelving und 1. The shelving was sold 2. The shelving was sol LO9-5 PROBLEM 9.4A Disposal of Plant Assets ets in the following transactions. ving was sold for $1,100 2. ne shelving was sold for $175 cash. During the current year, Hi ear, Hitchcock Developers disposed of plant assets in the Feb. 10 Office equipment cost ment costing $24,000 was given to a scrap dealer at Apr. cock's records showed th Aug. 15 Hitchcock traded in an scrap dealer at no charge. At the date the office equipment amounted to $21,800 of disposal, accumulated depreciat pool Associates for $900,000, receiving 1 Hitchcock sold land and a build e receivable for the remaining balance. Hitch- $100,000 cash and a 5-year, 9 percento S records showed the following amounts: Land, $50,000; Building, $550.000 mulated Depreciation: Building (at the date of disposal), $250,000. chcock traded in an old truck for a new one. The old truck had cost $26,000, and ccumulated depreciation amounted to $18,000. The list price of the new truck was 000, but Hitchcock received a $10,000 trade-in allowance for the old truck and paid 6,000 in cash. Hitchcock includes trucks in its Vehicles account. cock traded in its old computer system as part of the purchase of a new sys- n. The old system had cost $15,000, and its accumulated depreciation amounted 1,000. The new computer's list price was $8,000. Hitchcock accepted a trade omputer system, paying $1,500 down in cash and issuing Oct. 1 Hitchcock traded in its allowance of $500 for the old computer system, paying piye a 1-year, 8 percent note payable for the $6,000 balance owed.

can someone show me how this is done please??

Answer 1

Answer to part (a)
In the books oh Hitchcock Developers
General Journal
Date	Description	Debit	Credit
Feb-10	Accumulated depreciation	$    21,800
	Loss on disposal of equipment	$      2,200
	Office equipment		$    24,000
	(being office equipment disposed off)
Apr-01	Accumulated depreciation	$ 2,50,000
	Cash	$ 1,00,000
	Note Receivable	$ 8,00,000
	Land		$    50,000
	Building		$ 5,50,000
	Gain on assets disposal		$ 5,50,000
	(being land & building disposed off)
Aug-15	Vehicle new(39000-10000)	$    29,000
	Accumulated depreciation	$    18,000
	Loss on disposal of vehicle	$      7,000
	Cash		$    28,000
	Vehicle old		$    26,000
	(being new truck purchased and trade in of old truck)
Oct-01	Computer new (8000-500)	$      7,500
	Accumulated depreciation	$    11,000
	Loss on disposal of computer	$      4,000
	Cash		$      1,500
	8% note payable		$      6,000
	Computer old		$    15,000
	(being new computer purchased and trade in of old one)
Answer to part (b)
Gains or Losses on disposal of assets is included in the income statement and thereby affects the net profit but doesn’t affect the cash balance.
Answer to part (c )
There is difference between realised gains or losses and unrealised gains or losses. Realised gains forms part of income statement but unrealised gains or losses are not reported in income statement, instead they are accounted as accumulated or comprehensive income and forms part of owners equity in balance sheet. Hence realised gain or losses on plant assets are reported in income statement and unrealised gain or losses on marketable securities are shown under comprehensive income statement and forms part of owners equity in balance sheet