The Vidalia Group sold one of its plant assets on October 1 of the current year

Question

The Vidalia Group sold one of its plant assets on October 1 of the current year for $100,000. The asset had an original cost of $200,500 and an estimated residual value of $22,000. Vidalia used the straight-line method of depreciation assuming an estimated useful life of seven years. The asset was in service for five years as of January 1 of the current year Read the requirements Requirement a. Prepare the journal entry required to record the depreciation for the current year. (Record debits first, then credits. Exclude explanations from any journal entries) Account October 1 Requirement b. Prepare the journal entry required to record the sale of the asset. (Record debits first, then credits. Exclude explanations from any journal entries.) Account October 1

Explanation / Answer

Workings

Current Year Depreciation depreciation up to September end=(200500-22000)/7*9/12=19125

Accumulated depreciation=(200500-22000)/7*5+19125

DR CR Depreciation Expense 19,125.00 Accumulated Depreciation 19,125.00 Cash 100000 Accumulated Depreciation 146,625.00 Plant Asset 205000 Gain on Sales of Plant Asset 41625

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