Problem 9-3A Carla Vista Co. had the following assets on January 1, 2017 Life sa

Question

Problem 9-3A Carla Vista Co. had the following assets on January 1, 2017 Life salvages0 Item Cost Purchase Date (in years) Salvage Value Machinery 80,940 Ja.1, 2007 Truck During 2017, each of the assets was removed from service. The machinery was retired on January 1. The forklift was sold on June 30 for $13,680. The truck was dscarded on December 31 ournalize all entries required on the abave dates, induding entries to update depreciation, where applicable, an dispased assets. The company uses straight-line depreciation. All depreciation was up to date as of December 31, 2016. (Credit account litles are aut 10 4200 an. 1,2014 38,080 Jan. 1,2012 3,424 Indented when th nt is entered. Do not in Date Account Titles and Explanation Debit Credit To record depreclation expense on forklift) June 30

Explanation / Answer

Journal Entries Date Account Title and explanation Debit Credit Accumulated Depreciation $                  80,940 January 01, 2017      To Machinery $                     80,940 (To Record the disposal of machienary) Depreciation Expenses $                     3,420 Jnue , 30 2017         To Forklift $                       3,420 (To Record the depreciation for 6 months) Accumulated depreciation $                  23,940 June , 30 2017 Cash $                  13,680         To Forklift $                     37,620         To Gain on sale of Forklift (Record the sale of forklift) Accumulated Depreciation $                  21,660 Dec , 31 2017 Loss on Discard of Truck $                  16,420         To Truck $                     38,080 (To Record the discard of the truck) Calculation of Depreciation as per straight line Depreciation on Forklift Cost of Purchase of Equipment $            34,200.00 Less : Salvage Value $                            -   Value for Depreciation $            34,200.00 Life of the Building is = 5 Years Depreciation for the year = ($34,200 / 5 Years) $               6,840.00 Depreciation for three years upto 2016 ($ 6,840 X 3 Years) $                  20,520 Depreciation for the 6 month in June 2017 =($ 6,840 X 50%) $                     3,420 Total Depreciation $                  23,940 CALCULATION OF THE BOOK VALUE OF THE MACHIENE Purchase Value = $                  34,200 Less: Depreciation $                  23,940 Book Value = $                  10,260 LEsS: Sales Value $                  13,680 Gain on sales = $                     3,420 Calculation of Depreciation as per straight line Depreciation on Truck Cost of Purchase of Truck $            38,080.00 Less : Salvage Value $               3,424.00 Value for Depreciation $            34,656.00 Life of the Building is = 8 Years Depreciation for the year = ($34,656 / 8 Years) $               4,332.00 Depreciation for three years upto 2017 ($ 4,332 X 5 Years) $                  21,660 Total Depreciation $                  21,660 CALCULATION OF THE BOOK VALUE OF THE truck Purchase Value = $                  38,080 Less: Depreciation $                  21,660 Book Value = $                  16,420 Loss is of $ 16,420

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