Presented here are selected transactions for Snow Company for 2012. Jan. 1 Retir

Question

Presented here are selected transactions for Snow Company for 2012.

Jan. 1 Retired a piece of machinery that was purchased on January 1, 2002. The machine cost $67,800on that date and had a useful life of10years with no salvage value. June 30 Sold a computer that was purchased on January 1, 2009. The computer cost $27,200and had a useful life of5years with no salvage value. The computer was sold for $10,880. Dec. 31 Discarded a delivery truck that was purchased on January 1, 2007. The truck cost $54,000and was depreciated based on an8-year useful life with a $3,100salvage value.

Explanation / Answer

Jan. 1 Retired a piece of machinery that was purchased on January 1, 2000. The machine cost $62,316 and had a useful life of 10 years with no salvage value.
The asset is already fully depreciated.
Dr Accum depr $62,316
Cr Machinery $62,316

June 30 Sold a computer that was purchased on January 1, 2008. The computer cost $33,920 and had a useful life of 3 years with no salvage value. The computer was sold for $4,219 cash.
Dr Depr expense $5,653 (6 mths)
Cr Accum depr $5,653
January 1, 2008 to June 30 2010 = 30 months
Accum depr = $33,920/36 x 30 = $28,267
Dr Accum depr $28,267
Dr Cash $4,219
Dr Loss on disposal of computer $1,434
Cr Computer $33,920

Dec. 31 Sold a delivery truck for $9,099 cash. The truck cost $27,042 when it was purchased on January 1, 2007, and was depreciated based on a 5-year useful life with a $2,170 salvage value.
Dr Depr expense $4,974 (1 yr)
Cr Accum depr $4,974
January 1, 2007 to Dec. 31 2010 = 4 yrs
Accum depr = ($27,042 - $2,170)/5 x 4 = $19,898
Dr Accum depr $19,898
Dr Cash $9,099
Cr Truck $27,042
Cr Gain on disposal of truck $1,955

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