On January 1, 2016, Horton Inc. sells a machine for $21,000. The machine was ori

Question

On January 1, 2016, Horton Inc. sells a machine for $21,000. The machine was originally purchased on January 1, 2014 for $43,000. The machine was estimated to have a useful life of 5 years and no residual value. Horton uses straight-line depreciation oun a sosuted for taeiondoven a. Prepare the journal entry to record the sale. (f no entry is required for a transaction/event, select No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the entry for sale of equipment. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal 21

Explanation / Answer

i) Journal entry for sale of machinery

Bank A/c Dr. 21000

P&L A/c Dr. 4800

To Machinery 25800

ii)a) The amount of an asset'scost that will be depreciated. It is the cost minus the expected salvage value. Depreciatiable cost = cost -salvage value

= $34400-$4000

= $30400

ii)b) Depreciation per annum by straight line Method

=Depreciatiable cost/useful life

= $30400/4yrs.

= $7600

ii)c) Depreciation rate using production capacity = Depreciatiable cost/production units

= $30400/200000units

= $0.152/unit

ii)d) Depreciation rate using double declining method

Depreciation rate= $7600/30400

= 25%

=> 25%*2= 50%

Depreciation Expense= $30400*50%

= $15200

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