A company scraps a fully depreciated piece of equipment originally costing $20,0

Question

A company scraps a fully depreciated piece of equipment originally costing $20,000. They did not receive any proceeds. Record the journal entry.

A company sells a piece of plant equipment for $2,000. The original cost was $10,000, and the accumulated depreciation through the date of the sale was $6,500. Record the journal entry.

A company buys a new pickup truck for $35,000 on the first day of the month. They will assume a 5-year life with a salvage value equal to 10% of the original cost. Record the first monthly depreciation journal entry.

A company sells 200,000 shares of newly issued common stock having a par value of $1 for $8.50 per share. Record the journal entry.

A company has net income of $4,580,000. There are 200,000 shares of $50 par, 6% preferred stock outstanding and 800,000 shares of common stock. What is the net income per common share (earnings per share)? Show your calculation.

Explanation / Answer

Journal entries are shown as under:

Earning per share is calculated as below:

Date Particulars L.F Amount ($) Amount ($) Accumulated Depreciation-Equipment 20,000    Equipment 20,000 (For asset costing $20,000 depreciated fully scraped at 0) Cash 2,000 Accumulated Depreciation-Equipment 6,500 Loss on sale of equipment 1,500    Equipment 10,000 (For equipment costing 3,500 sold for $2,000) Depreciation 525    Accumulated Depreciation-Truck 525 (For monthly depreciation of truck recorded) {($35,000-10%)/5 }/12 Bank 1,700,000    Share capital 200,000    Share Premium 1,500,000 (For shares issued at premium)

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