allowance (its taut U mmercial substance s e of of $2.10 2. Building $1,965,6 le
ID: 2574489 • Letter: A
Question
allowance (its taut U mmercial substance s e of of $2.10 2. Building $1,965,6 leased la he bnle in cash. The exchange has com set at 4 3. The eq value 4. Truck life o a delivery truck for $78,750 salvage value of s6,750. Th Record the exchange of automobiles. and an estimated salvage value of s 0 ca OnJamuary 2,2009, Blake Company purchased a del 1-2 at a aor an estimated usefiul lite of six years and an estimattruck Prpare a schedule showing the computation of the book December 31, 2011 methed of depreciation is being used. of S life uck On The fo Jan. AprilExplanation / Answer
Answer :
Original value = $ 78750
Life = 6 Years
Salvage Value = $ 6750
Date of purchase 2 January 2009
Depreciation per year = (78750-6750)/6 = $ 12000
a. Schedule of book value till december 2011
b. Depreciation till 01.07.2009 $ 12000/2 = $ 6000
Value on 01.07.2009 after depreciation = 42750-6000 = $36,750
Entry
Depreciation A/c Dr. 6000
To Truck A/c 6000
(Being Truck Deprecated for the half year)
c.
1.
Cash A/c Dr 26250
Loss on sale of Truck A/c 10500
To Truck A/c 36750
(Being truck sold and loss recognised)
.2.
Cash A/c Dr 48000
To Truck A/c 36750
To Profit on sale 11250
(Being truck sold at profit)
3.
Truck Dispossed Off A/c Dr 36750
To Truck A/c 36750
(Being Truck Dispossed)
*As Truck is expected to be sold. There will be no entry for the expectation.
4.
Office quipment A/c Dr 105000
To Cash A/c 60000
To Truck A/c 36750
To Profit on Exchange 8250
(Being Truck with cash exchanged with office equipment)
5.
Office quipment A/c Dr 112500
To Cash A/c 67500
To Truck A/c 36750
To Profit on Exchange 8250
(Being Truck with cash exchanged with office equipment)
6.
Loss due to accident A/c Dr. 36750
To Truck 36750
(Being Truck Distroyed)
*Again no entry for expectation.
Date Opening Value Depreciation Closing Value 31.12.2009 78750 12000 66750 31.12.2010 66750 12000 54750 31.12.2011 54750 12000 42750