(a) Your answer is partially correct. On June 1, 2024, Blossom Opportunity Ltd. ("BO") purchased a piece of equipment for $33,120. At the time, management determined that the equipment would have a residual value of $2,880 at the end of its six-year life. BO has a December 31 year end and uses the straight-line depreciation method. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
(a) Your answer is partially correct. On June 1, 2024, Blossom Opportunity Ltd. ("BO") purchased a piece of equipment for $33,120. At the time, management determined that the equipment would have a residual value of $2,880 at the end of its six-year life. BO has a December 31 year end and uses the straight-line depreciation method. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:Prepare all necessary journal entries for 2024, 2025, and 2026 related to each of the following scenarios:
(a)
Your answer is partially correct.
On June 1, 2024, Blossom Opportunity Ltd. ("BO") purchased a piece of equipment for $33,120. At the time, management
determined that the equipment would have a residual value of $2,880 at the end of its six-year life. BO has a December 31 year
end and uses the straight-line depreciation method. (Record entries in the order displayed in the problem statement. Credit account
titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts. List all debit entries before credit entries.)
1
Transcribed Image Text:Assume the same facts as in part (a) except that BO purchased the equipment on September 30 rather than on June 1. Also
assume that BO ended up selling the piece of equipment on June 30, 2026, for $22,200. (Record entries in the order displayed in the
problem statement. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is
required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
Date
Account Titles and Explanation
(To record depreciation)
(To record sale of equipment)
Debit
Cre
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