Question

Presented below are selected transactions at Novak Company for 2020.

Jan.	1		Retired a piece of machinery that was purchased on January 1, 2010. The machine cost $64,300 on that date. It had a useful life of 10 years with no salvage value.
June	30		Sold a computer that was purchased on January 1, 2017. The computer cost $42,300. It had a useful life of 5 years with no salvage value. The computer was sold for $14,700.
Dec.	31		Discarded a delivery truck that was purchased on January 1, 2016. The truck cost $42,000. It was depreciated based on a 6-year useful life with a $3,000 salvage value.

Answer 1

Jan 1,

Accumulated-Depreciation account...........Debit $64,300

To Equipment account...........................Credit $64,300

June 30,

Depreciation Expense account...............Debit $4,230

To Accumulated Depreciation-Equipment. credit $4,230

($42,300 / 5) * 6/12 = $4,230)

Cash account..............................................Debit $14,700

Accumulated Depreciation-Equipment a/c...Debit $29,610 [(42,300 / 5) * 3} + 4,230]

loss on disposal of plant assets account...Debit $2,010

Equipment account........................................Credit $42,300

Dec 31,

Depreciation Expense account...............Debit $6,500

To Accumulated Depreciation-Equipment. credit $6,500

($42,000 -3000)/ 6) = $6,500)

Loss on disposal of Plant asset account.....Debit $9,500

Accumulated Depreciation-Equipment.. credit $32,500

To Equipment account..........................Credit $42,000

($42,000 - (6,500*5)

Answer 2

on jun 30 the computer is not a loss it is a credit of 2010