Carla Vista Limited purchased delivery equipment on March 1, 2016, for $128,750
ID: 2571211 • Letter: C
Question
Carla Vista Limited purchased delivery equipment on March 1, 2016, for $128,750 cash. At that time, the equipment was estimated to have a useful life of five years and a residual value of $10,150. The equipment was disposed of on November 30, 2018. Carla Vista uses the diminishing-balance method at one time the straight-line depreciation rate, has an August 31 year end, and makes adjusting entries annually.
Record the acquisition of equipment on March 1, 2016. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Record depreciation at August 31, 2016, 2017, and 2018. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
Record the disposal of the equipment on November 30, 2018, under each of the following independent assumptions: (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
It was retired for no proceeds.
Carla Vista Limited purchased delivery equipment on March 1, 2016, for $128,750 cash. At that time, the equipment was estimated to have a useful life of five years and a residual value of $10,150. The equipment was disposed of on November 30, 2018. Carla Vista uses the diminishing-balance method at one time the straight-line depreciation rate, has an August 31 year end, and makes adjusting entries annually.
Explanation / Answer
Depreciation calculation
Depreciation rate= 1/ 5 years =20%
1) Date Accounts Debit Credit 1-Mar-16 Delivery Equipment $128,750 Cash $128,750 (Recording the acquisition of equipment on March 1, 2016.) 2) 31-Aug-16 Depreciation $12,875.00 Accumulated Depreciation $12,875.00 31-Aug-17 Depreciation $23,175.00 Accumulated Depreciation $23,175.00 31-Aug-18 Depreciation $18,540.00 Accumulated Depreciation $18,540.00 3) 30-Nov-18 Depreciation $3,708.00 Accumulated Depreciation $3,708.00 a) It was sold for $65,830. Cash $ 65,830.00 Loss on disposal ($70452-$65830) $ 4,622.00 Accumulated Depreciation ($12875+$23175+$18540+$3708) $ 58,298.00 Delivery Equipment $ 128,750.00 b) It was sold for $72,930. Cash $72,930 Accumulated Depreciation $58,298.00 Gain on disposal ($72,930-$70,452) $2,478.00 Delivery Equipment $ 128,750.00 c) It was retired for no proceeds. Accumulated Depreciation $58,298.00 Loss on disposal (WDV) $ 70,452.00 Delivery Equipment $ 128,750.00