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19 March, 09:20

Crane Company had the following assets on January 1, 2022.

Item Cost Purchase Date Useful Life (in years) Salvage Value

Machinery $59,000 Jan. 1, 2012 10 $0

Forklift 18,000 Jan. 1, 2019 5 0

Truck 24,400 Jan. 1, 2017 8 3,000

During 2022, each of the assets was removed from service. The machinery was retired on January 1. The forklift was sold on June 30 for $10,800. The truck was discarded on December 31.

Required:

Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on disposed assets. The company uses straight-line depreciation. All depreciation was up to date as of December 31, 2021.

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Answers (2)
  1. 19 March, 09:30
    0
    Machinery

    J1

    Accumulated Depreciation - Machinery $59,000 (debit)

    Cost $59,000 (credit)

    Accumulated Depreciation = ($59,000 / 10) * 10 = 59,000

    forklift

    J1

    Depreciation - forklift $1,800 (credit)

    Accumulated Depreciation - forklift $1,800 (credit)

    Depreciation Calculation = (18,000/5) * 1/2 = $1,800

    J2

    Cash $10,800 (debit)

    Accumulated Depreciation - forklift $12,600 (debit)

    Profit and Loss $5,400 (credit)

    Cost $18,000 (credit)

    Accumulated Depreciation = (18,000/5) * 3+1,800 = 12,600

    Truck

    J1

    Depreciation - Truck $2,675 (credit)

    Accumulated Depreciation - Truck $2,675 (credit)

    Depreciation Calculation = (24,400 - 3,000 / 8) = $2,675

    J2

    Accumulated Depreciation - Truck $16,050 (debit)

    Profit and Loss $8,350 (debit)

    Cost $24,400 (credit)

    Accumulated Depreciation = (24,400 - 3,000 / 8) * 6 = 16,050

    Explanation:

    Machinery

    Accumulated Depreciation = ($59,000 / 10) * 10 = 59,000

    forklift

    Depreciation Calculation = (18,000/5) * 1/2 = $1,800

    Accumulated Depreciation = (18,000/5) * 3+1,800 = 12,600

    Truck

    Depreciation Calculation = (24,400 - 3,000 / 8) = $2,675

    Accumulated Depreciation = (24,400 - 3,000 / 8) * 6 = 16,050
  2. 19 March, 11:01
    0
    Date Account and explanation Debit Credit

    Jan 1,2022 Accumulated Depreciation $59,000

    Machinery $59,000

    (To machinery retired on Jan 1)

    June 30,2022 Depreciation expenses ($3,600*6/12) $1,800

    Accumulated Depreciation ($3,600*6/12) $1,800

    (To depreciation charged for 6 months)

    June 30,2022 Cash $10,800

    Accumulated Depreciation $12,600

    Gain on isposal of Forklift $5,400

    Forklift $18,000

    (To Forklift disposed with profit)

    Dec 31,2022 Depreciation expenses $2,675

    Accumulated Depreciation $2,675

    (To depreciation charged for year)

    Dec 31,2022 Accumulated Depreciation $16,050

    Loss on retiremnt $8,350

    Truck $24,400
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