Presented below are selected transactions at Tomas Company for 2014. Journalize

Question

Presented below are selected transactions at Tomas Company for 2014.

Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on assets disposed of. Tomas Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2013.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Jan. 1 Retired a piece of machinery that was purchased on January 1, 2004. The machine cost $59,270 on that date. It had a useful life of 10 years with no salvage value. June 30 Sold a computer that was purchased on January 1, 2011. The computer cost $35,950. It had a useful life of 5 years with no salvage value. The computer was sold for $14,710. Dec. 31 Discarded a delivery truck that was purchased on January 1, 2010. The truck cost $33,810. It was depreciated based on a 6-year useful life with a $2,610 salvage value.

Explanation / Answer

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Presented here are selected transactions for Pine Company for 2014.

Instructions

Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on assets disposed of. Pine Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2013.)

Answer

DR = debit CR = credit

Jan. 1

DRAccumulated Depreciation $71,000

CR Machine $71,000

Jun. 30

DR Cash $12,000

DR Accumulated Depreciation $21,000 [depreciation = $30,000/5years = $6000/yr * 3.5years]

CR Gain on Sale $3000 [this value is a "plug"]

CR Computer $30,000

Dec. 31

DR Accumulated Depreciation $22,483 [($33,400 - $3000)/8years = $3800/yr * 5 11/12 years]

DR Loss on disposal $10,917

CR Truck $ 33,400

Jan. 1 Retired a piece of machinery that was purchased on January 1, 2004. The machine cost $71,000 on that date and had a useful life of 10 years with no salvage value. June 30 Sold a computer that was purchased on January 1, 2011. The computer cost $30,000 and had a useful life of 5 years with no salvage value. The computer was sold for $12,000. Dec. 31 Discarded a delivery truck that was purchased on January 1, 2009. The truck cost $33,400 and was depreciated based on an 8-year useful life with a $3,000 salvage value.

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