Clarion Co. completed the following transactions and events Involving the purchase and operation oT equipment in its business. 2016 Paid $300,000 cash plus $30,000 in sales tax and $18,500 in transportation (FOB shipping point) for a new loader, which is estimated to have a four-year life and a $25,500 salvage value. Loader costs are recorded in the Machinery account. Paid $15,000 to enclose the cab and install air conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $1,500. Recorded double-declining balance depreciation on the loader. Jan. Jan. 3 Dec. 31 2017 Paid $50,400 to overhaul the loader's engine, which increased the loader's estimated useful life by two years. Paid $1,800 to repair the loader after the operator backed it into a tree. Recorded double-declining balance depreciation on the loader. Sold the loader for $250,000 cash. Jan. 1 Feb. Dec. Dec. 17 31 31 EQUIRED: Prepare journal entries to record the above transactions and events View transaction list Journal entry worksheet 1 2 3 4 6 7 Paid $300,000 cash plus $30,000 in sales tax and $18,500 in transportation (FOB shipping point) for a new loader, which is estimated to have a four-year life and a $25,500 salvage value. Loader costs are recorded in the Machinery account. Note: Enter debits before credits. A В D S.No/Date Account Title Debit Credit 1 01/01/2016 2 3 4 5 6
Clarion Co. completed the following transactions and events Involving the purchase and operation oT equipment in its business. 2016 Paid $300,000 cash plus $30,000 in sales tax and $18,500 in transportation (FOB shipping point) for a new loader, which is estimated to have a four-year life and a $25,500 salvage value. Loader costs are recorded in the Machinery account. Paid $15,000 to enclose the cab and install air conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $1,500. Recorded double-declining balance depreciation on the loader. Jan. Jan. 3 Dec. 31 2017 Paid $50,400 to overhaul the loader's engine, which increased the loader's estimated useful life by two years. Paid $1,800 to repair the loader after the operator backed it into a tree. Recorded double-declining balance depreciation on the loader. Sold the loader for $250,000 cash. Jan. 1 Feb. Dec. Dec. 17 31 31 EQUIRED: Prepare journal entries to record the above transactions and events View transaction list Journal entry worksheet 1 2 3 4 6 7 Paid $300,000 cash plus $30,000 in sales tax and $18,500 in transportation (FOB shipping point) for a new loader, which is estimated to have a four-year life and a $25,500 salvage value. Loader costs are recorded in the Machinery account. Note: Enter debits before credits. A В D S.No/Date Account Title Debit Credit 1 01/01/2016 2 3 4 5 6
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:Clarion Co. completed the following transactions and events involving the purchase and operation of equipment in
its business.
2016
Paid $300,000 cash plus $30,000 in sales tax and $18,500 in transportation (FOB shipping point) for
a new loader, which is estimated to have a four-year life and a $25,500 salvage value. Loader costs
are recorded in the Machinery account.
Paid $15,000 to enclose the cab and install air conditioning in the loader to enable operations under
harsher conditions. This increased the estimated salvage value of the loader by another $1,500.
Recorded double-declining balance depreciation on the loader.
Jan.
1
Jan.
3
Dec.
31
2017
Jan.
1
Paid $50,400 to overhaul the loader's engine, which increased the loader's estimated useful life by
two years.
Paid $1,800 to repair the loader after the operator backed it into a tree.
Recorded double-declining balance depreciation on the loader.
Sold the loader for $250,000 cash.
Feb.
17
Dec.
31
Dec.
31
REQUIRED: Prepare journal entries to record the above transactions and events
View transaction list
Journal entry worksheet
1
2
3
4
6
7
Paid $300,000 cash plus $30,000 in sales tax and $18,500 in transportation
(FOB shipping point) for a new loader, which is estimated to have a four-year
life and a $25,500 salvage value. Loader costs are recorded in the Machinery
account.
Note: Enter debits before credits.
A
В
C
S. No/Date
Account Title
Debit
Credit
1
01/01/2016
4
5
6
Record entry
Clear entry
View general journal
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