Presented here are selected transactions for Sager Corporation for 2010. Jan. 1
ID: 2347292 • Letter: P
Question
Presented here are selected transactions for Sager Corporation for 2010.Jan. 1 Retired a piece of machinery that was purchased on January 1, 2000. The machine cost $113,103 on that date and had a useful life of 10 years with no salvage value.
June 30 Sold a computer that was purchased on January 1, 2007. The computer cost $47,790 and had a useful life of 5 years with no salvage value. The computer was sold for $15,930.
Dec. 31 Discarded a delivery truck that was purchased on January 1, 2005. The truck cost $49,383 and was depreciated based on an 8-year useful life with a $4,779 salvage value.
Journalize all entries required on the above dates, including entries to update depreciation on assets disposed of, where applicable. Sager Corporation uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2009.) (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2. Round answers to 0 decimal places, e.g. 2,550.)
Explanation / Answer
Jan. 1 Current book value is 0. This machinery has been depreciated fully depreciated (10 years Jan 2000 to Dec 2009). Journal entry Debit: Accumulated depreciation machinery 113,103 Credit: Machinery 113,103 Jan 30 Depreciation per year = 47,790/5 = 9558 per year Partial depreciation for 2010 is 9558*6 months/12 months = 4779 accumulated depreciation at time of sale = 3*9558 (for 2007 through 2009) + 4779 = 33453 Journal entries: Debit: Depreciation expense 4779 Credit: Accumulated depreciation 4779 (to record depreciation expense for 2010) Debit: Accumulate depreciation 33453 Debit: Cash 15930 Credit: Computer 47790 Credit: Gain on sales 1593 (to record sale of computer) Dec 31 Depreciation expense = (49383 - 4779)/8 = 5575.50 per year accumulated depreciation at time of sale = 6*5575.50 = 33453 Journal entries: Debit: Depreciation expense 5576 Credit: accumulatd depreiation 5576 (to record depreciation expense for 2010) debit: Accumulated depreciation 33453 debit: loss on disposal 15930 credit: truck 49383