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7 December, 13:40

Here are selected 2017 transactions of Novak Corporation. Jan. 1 Retired a piece of machinery that was purchased on January 1, 2007. The machine cost $61,400 and had a useful life of 10 years with no salvage value. June 30 Sold a computer that was purchased on January 1, 2015. The computer cost $35,600 and had a useful life of 4 years with no salvage value. The computer was sold for $4,700 cash. Dec. 31 Sold a delivery truck for $9,500 cash. The truck cost $24,100 when it was purchased on January 1, 2014, and was depreciated based on a 5-year useful life with a $3,300 salvage value. Journalize all entries required on the above dates, including entries to update depreciation on assets disposed of, where applicable. Novak Corporation uses straight-line depreciation.

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  1. 7 December, 17:33
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    dep expense 4,450 debit

    acc depreciation computer 4,450 credit

    to record depreciation for the computer

    cash 4,700 debit

    acc depreciation 22,250 debit

    loss on disposal 9,250 debit

    computer 35,600 credit

    to record sale of computer

    dep expense 4,160 debit

    acc depreciation truck 4,160 credit

    to record depreciation expense for the truck 2017

    cash 9,500

    acc depreication 16,640

    gain on disposal 2,040

    truck 24,100

    to record sale of a truck

    Explanation:

    Computer:

    35,600 / 4 = 8,900 depreciation per year

    depreciation for 2017

    january to june 30th - -> half a year so half depreciation

    8,900 / 2 = 4,450

    then we do the sale of the computer

    acc depreciation

    from jan 1st 2015 to june 30th 2017

    2 and a half year

    8,900 + 8,900 + 4,450 = $22,250.00

    book value 35,600 - 22,250 = 13,350

    proceeds 4,700

    loss on disposal 9,250

    truck

    Acquisition Value 24100

    Salvage Value 3300

    ammount subject to depreciation 20800

    Useful Life 5

    depreciation per year 4160

    We need to do the entry for the depreication for the year.

    Then we calcualte the gain/loss on disposal

    accumualted from jan 2014 to dec 31th 2017

    4 years

    4,160 x 4 = 16,640

    book value 24.100 - 16,640 = 7,460

    proceeds 9,500

    gain on disposal 2040
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