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Assume that, when the delivery truck was sold on January 1, the accountant only recorded a debit to Cash and a credit to Gain on Disposal. Because of this, also assume that the accountant recorded depreciation on this asset for 2024. What accounts are now overstated or understated because of these errors? Gain on Disposal Accumulated Depreciation-Vehicles Vehicles Depreciation Expense Loss on Disposal 00000

Assume that, when the delivery truck was sold on January 1, the accountant only recorded a debit to Cash and a credit to Gain on Disposal. Because of this, also assume that the accountant recorded depreciation on this asset for 2024. What accounts are now overstated or understated because of these errors? Gain on Disposal Accumulated Depreciation-Vehicles Vehicles Depreciation Expense Loss on Disposal 00000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Assume that, when the delivery truck was sold on January 1, the accountant only recorded a debit to Cash and a credit to Gain on Disposal. Because of this, also assume that the accountant recorded depreciation on this asset for 2024. What accounts are now overstated or understated because of these errors? Gain on Disposal Accumulated Depreciation-Vehicles Vehicles Depreciation Expense Loss on Disposal 00000
Transcribed Image Text:Assume that, when the delivery truck was sold on January 1, the accountant only recorded a debit to Cash and a credit to Gain on Disposal. Because of this, also assume that the accountant recorded depreciation on this asset for 2024. What accounts are now overstated or understated because of these errors? Gain on Disposal Accumulated Depreciation-Vehicles Vehicles Depreciation Expense Loss on Disposal 00000
Presented here are selected transactions for Cullumber Limited for 2024, Cullumber uses straight-line depreciation and records adjusting entries annually. Jan. 1 Sold a delivery truck for $19,190 cash. The truck cost $67,530 when it was purchased on January 1, 2021, and was depreciated based on a four-year useful life with a $6,290 residual value. Sept. 1 Dec. 30 Sold computers that were purchased on January 1, 2022. They cost $11,628 and had a useful life of three years with no residual value. The computers were sold for $540 cash. Retired equipment that was purchased on January 1, 2015. The equipment cost $146,400 and had a useful life of 10 years with no residual value. No proceeds were received.
Transcribed Image Text:Presented here are selected transactions for Cullumber Limited for 2024, Cullumber uses straight-line depreciation and records adjusting entries annually. Jan. 1 Sold a delivery truck for $19,190 cash. The truck cost $67,530 when it was purchased on January 1, 2021, and was depreciated based on a four-year useful life with a $6,290 residual value. Sept. 1 Dec. 30 Sold computers that were purchased on January 1, 2022. They cost $11,628 and had a useful life of three years with no residual value. The computers were sold for $540 cash. Retired equipment that was purchased on January 1, 2015. The equipment cost $146,400 and had a useful life of 10 years with no residual value. No proceeds were received.
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