Cullumber Company had the following assets on January 1, 2022. Item Cost Purchase Date Useful Life (in years) Salvage Value Machinery $83,000 Jan. 1, 2012 10 $ 0 Forklift 42,000 Jan. 1, 2019 5 0 Truck 48,400 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 $13,200. The truck was discarded on December 31. 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. Date Account Titles and Explanation Debit Credit Jan 1 Accumulated Depreciation - Equipment 83000 enter a credit amount Equipment enter a debit amount enter a credit amount June 30 depreciation expense enter a debit amount enter a credit amount enter a debit amount enter a credit amount (To record depreciation expense on forklift) June 30 cash 13200 enter a credit amount accumulated depreciation - equipment enter a debit amount enter a credit amount enter an account title to record sale of forklift enter a debit amount enter a credit amount equipment enter a debit amount enter a credit amount (To record sale of forklift) Dec 31 enter an account title to record depreciation expense on truck enter a debit amount enter a credit amount enter an account title to record depreciation expense on truck enter a debit amount enter a credit amount (To record depreciation expense on truck) Dec 31 accumulated depreciation - equipment enter a debit amount enter a credit amount enter an account title to record sale of truck enter a debit amount enter a credit amount equipment enter a debit amount enter a credit amount
Cullumber Company had the following assets on January 1, 2022. Item Cost Purchase Date Useful Life (in years) Salvage Value Machinery $83,000 Jan. 1, 2012 10 $ 0 Forklift 42,000 Jan. 1, 2019 5 0 Truck 48,400 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 $13,200. The truck was discarded on December 31. 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. Date Account Titles and Explanation Debit Credit Jan 1 Accumulated Depreciation - Equipment 83000 enter a credit amount Equipment enter a debit amount enter a credit amount June 30 depreciation expense enter a debit amount enter a credit amount enter a debit amount enter a credit amount (To record depreciation expense on forklift) June 30 cash 13200 enter a credit amount accumulated depreciation - equipment enter a debit amount enter a credit amount enter an account title to record sale of forklift enter a debit amount enter a credit amount equipment enter a debit amount enter a credit amount (To record sale of forklift) Dec 31 enter an account title to record depreciation expense on truck enter a debit amount enter a credit amount enter an account title to record depreciation expense on truck enter a debit amount enter a credit amount (To record depreciation expense on truck) Dec 31 accumulated depreciation - equipment enter a debit amount enter a credit amount enter an account title to record sale of truck enter a debit amount enter a credit amount equipment enter a debit amount enter a credit amount
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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Question
Cullumber Company had the following assets on January 1, 2022.
| Item | Cost | Purchase Date | Useful Life (in years) |
Salvage Value | ||||
|---|---|---|---|---|---|---|---|---|
|
Machinery
|
$83,000 | Jan. 1, 2012 | 10 | $ 0 | ||||
|
Forklift
|
42,000 | Jan. 1, 2019 | 5 | 0 | ||||
|
Truck
|
48,400 | 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 $13,200. The truck was discarded on December 31.
Journalize all entries required on the above dates, including entries to update
|
Date
|
Account Titles and Explanation
|
Debit
|
Credit
|
|
|---|---|---|---|---|
| Jan 1 |
|
83000
|
enter a credit amount
|
|
|
Equipment
|
enter a debit amount
|
enter a credit amount
|
||
| June 30 |
depreciation expense
|
enter a debit amount
|
enter a credit amount
|
|
|
enter a debit amount
|
enter a credit amount
|
|||
| (To record depreciation expense on forklift) | ||||
|
cash
|
13200
|
enter a credit amount
|
|
|
accumulated depreciation - equipment
|
enter a debit amount
|
enter a credit amount
|
||
|
enter an account title to record sale of forklift
|
enter a debit amount
|
enter a credit amount
|
||
|
equipment
|
enter a debit amount
|
enter a credit amount
|
||
| (To record sale of forklift) | ||||
| Dec 31 |
enter an account title to record depreciation expense on truck
|
enter a debit amount
|
enter a credit amount
|
|
|
enter an account title to record depreciation expense on truck
|
enter a debit amount
|
enter a credit amount
|
||
| (To record depreciation expense on truck) | ||||
|
accumulated depreciation - equipment
|
enter a debit amount
|
enter a credit amount
|
|
|
enter an account title to record sale of truck
|
enter a debit amount
|
enter a credit amount
|
||
|
equipment
|
enter a debit amount
|
enter a credit amount
|
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