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Pronghorn Corporation owns machinery that cost $30,800 when purchased on January

ID: 2408483 • Letter: P

Question

Pronghorn Corporation owns machinery that cost $30,800 when purchased on January 1, 2017. Depreciation has been recorded at a rate of $4,620 per year, resulting in a balance in accumulated depreciation of $9,240 at December 31, 2018. The machinery is sold on September 1, 2019, for $20,480.

Date

Account Titles and Explanation

Debit

Credit

Date

Account Titles and Explanation

Debit

Credit

Pronghorn Corporation owns machinery that cost $30,800 when purchased on January 1, 2017. Depreciation has been recorded at a rate of $4,620 per year, resulting in a balance in accumulated depreciation of $9,240 at December 31, 2018. The machinery is sold on September 1, 2019, for $20,480.

Explanation / Answer

Ans.

Machinary purchases on 1 january 2017 on Cost = $30,800

Deprication Per Year = $4,620

Accumulated Deprication on 31 Dec. 2018 = $9,240

Machinary sold on Sept. 2019 for $20,480

Deprication of 8 months = (4620/12)*8 = $3,080

Total Accumulated deprication = $9,240 + $3,080 = $12,320

General Journal

DATE DESCRIPTION DEBIT CREDIT (1) 1 SEPT 2019 Deprication Expenses 3080 To Accumulated Deprication 3080 (Being Deprication for 2019) (2) 1 SEPT 2019 Cash 20480 Accumulated Deprication 12320 To Machinary 30800 To Gain on Disposal of Machinary 2000 (Being machinary Sold)