Cullumber Company had the following assets on January 1, 2022.Useful Life(in years)Salvage Value$ 0ItemCostPurchase DateMachinery$72,000Jan. 1, 201210Forklift31,000Jan. 1, 2019Truck37,400Jan. 1, 20178.3,000During 2022, each of the assets was removed from service. The machinery was retired on January 1. The forklift was sold onJune 30 for $12,100. The truck was discarded on December 31.Journalize all entries required on the above dates, indluding entries to update depreciation, where applicable, on disposedassets. The company uses straight-line depreciation. All depreciation was up to date as of December 31, 2021. (Creditaccount titles are automatically indented when the amount is entered. Do not indent manually. If no entry isrequired, select "No Entry" for the account titles and enter 0 for the amounts.)DateAccount Titles and ExplanationDebitCredit(To record depreciation expense on forklift)(To record sale of forklift)(To record depreciation expense on truck) Useful LifeItemCostPurchase Date(in years)Salvage ValueMachinery$72,000Jan. 1, 201210$ 0Forklift31,000Jan. 1, 2019Truck37,400Jan. 1, 20178.3,000During 2022, each of the assets was removed from service. The machinery was retired on January 1. The forklift was sold onJune 30 for $12,100. The truck was discarded on December 31.Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on disposedassets. The company uses straight-line depreciation. All depreciation was up to date as of December 31, 2021. (Creditaccount titles are automatically indented when the amount is entered. Do not indent manually. If no entry isrequired, select "No Entry" for the account titles and enter 0 for the amounts.)DateAccount Titles and ExplanationDebitCredit(To record depreciation expense on forklift)(To record sale of forklift)(To record depreciation expense on truck)(To record sale of truck)<>

Name: Cullumber Company had the following assets on January 1, 2022.Useful
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: Cullumber Company had the following assets on January 1, 2022.Useful Life(in years)Salvage Value$ 0ItemCostPurchase DateMachinery$72,000Jan. 1, 201210Forklift31,000Jan. 1, 2019Truck37,400Jan. 1, 20178.3,000During 2022, each of the assets was removed

Solution:- Journal entries in the books of "Cullumber" company as follows:- Working notes: - (1) Depreciation expense = (Book value - Salvage value) / Useful life Depreciation expense = ($31,000 - $0) / 5 = $6,200 per year So, for half year = $6,200 * 6/12 = $3,100 (2) From Jan. 1, 2019 to June 30, 2022 i.e. 3.5 years. Accumulated depreciation = $6,200 * 3.5 years = $21,700 (3) Gain on disposal of plant assets = Sale value + Accumulated depreciation - Book value Gain on disposal of plant assets = $12,100 + $21,700 - $31,000 Gain on disposal of plant assets = $2,800 (4) Depreciation expense = (Book value - Salvage value) / Useful life Depreciation expense = ($37,400 - $3000) / 8 Depreciation expense = $4,300 per year (5) From Jan. 1, 2017 to Dec. 31, 2022 i.e. 6 years. Accumulated depreciation = $4,300 * 6 years = $25,800 (6) Loss on disposal of plant assets = Book value - Accumulated depreciation Loss on disposal of plant assets = $37,400 - $25,800 Loss on disposal of plant assets = $11,600 Journal entries:- Date Account titles and Explanation Debit Credit Jan. 01 Accumulated depreciation-Equipment $72,000 Equipment $72,000 (Equipment retired $72,000 x 10 / 10) June 30 Depreciation expense (1) $3,100 Accumulated depreciation-Equipment $3,100 (To record depreciation expense on forklift) June 30 Cash $12,100 Accumulated depreciation-Equipment (2) $21,700 Equipment $31,000 Gain on disposal of plant assets (3) $2,800 (To record sale of forklift) Dec. 31 Depreciation expense (4) $4,300 Accumulated depreciation-Equipment $4,300 (To record depreciation expense on truck) Dec. 31 Accumulated depreciation-Equipment (5) $25,800 Loss on disposal of plant assets (6) $11,600 Equipment $37,400 (To record sale of truck) If you satisfied with my workings please give positive rating thank you..

Business

Accounting

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 $12,100. The truck was discarded on December 31. Journalize all entries required on the above dates, indluding 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. (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.)

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 $12,100. The truck was discarded on December 31. Journalize all entries required on the above dates, indluding 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. (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.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Pharoah Company owns equipment that cost $71.000 when purchased on January 1, 2019. It has been…

A: In case of multiple subparts, we are allowed to solve only the first 3 subparts. If you want the…

Q: Starz service uses the straight-line method of depreciation. The company’s fiscal year-end is…

A: Purchasing of an asset is not expensed in the same period in which it is purchased. The cost of…

Q: Concord Company is in the process of preparing its financial statements for 2025. Assume that no…

A: Solution for Asset 1- Given,Cost of Equipment (January 2,2022) = $86,600Useful life= 10 YearsSalvage…

Q: Wildhorse Co. purchased a machine on January 1, 2018, for $500,500. At that time, it was estimated…

A: Straight line depreciation is a common and simplest method of calculation depreciation.As per this…

Q: Bridgeport Tool Corp. records depreciation annually at the end of the year. Its policy is to take a…

A: Business organizations are required to charge the depreciation expense on the assets so as to show…

Q: Buffalo Corporation owns machinery that cost $20,400 when purchased on July 1, 2017. Depreciation…

A: Depreciation is a reduction in the value of assets due to the usage of that asset. We can evaluate…

Q: On January 1, 2025, Sunland Corp, acquired a machine at a cost of $960000. It is to be depreciated…

A: Step 1:Computation of the annual depreciation expense on the machine using the straight-line…

Q: Cadillac Construction Company uses the retirement method to determine depreciation on its small…

A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…

Q: Concord Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service…

A: Journal entry is a process of recording and classifying business transactions into books of accounts…

Q: Alteran Corporation purchased office equipment for $1.5 million in 2015. The equipment is being…

Q: On August 31, 2018, Option Landscapes discarded equipment that had a cost of $16,500.…

A: Depreciation is an accounting method where the entities assets are gone through wear and tear. The…

Q: ent has been depreciated using the sum-of-the-years"e company decided to change the method of…

A: Equipment : Sum of year digit = 5+4+3+2+1 = 15Accumulated depreciation 2018 to 2021 =…

Q: Teal Co. purchased a machine on January 1, 2018, for $588,500. At that time, it was estimated that…

A: Depreciation is the systematic decline in the value of non-current assets as a result of wear and…

Q: On July 1, 2024, Action Printers purchased a printer for $67,000. It expects the printer to last for…

A: In the case of an asset purchased during the year depreciation of an asset under the straight-line…

Q: Record the general journal entry required for the disposal of the equipment on 1 July 2024 if…

A: Straight line method of depreciation is one of the popular method of charging depreciation under…

Q: On July 1, 2019, Blossom Company purchased new equipment for $70,000. Its estimated useful life was…

A: Depreciation expense: Depreciation expense is a non-cash expense, which is recorded on the income…

Q: Oriole Company owns equipment that cost $60,900 when purchased on January 1, 2019. It has been…

A: Journal entries are the primary recording of the business transactions in the books of accounts.…

Q: On December 31, 2022, Plattsville Plastics decided to dispose of an extrusion machine. The original…

A: The objective of the question is to determine the correct adjusting entry related to the disposal of…

Q: Cheyenne Company owns equipment that cost $94,000 when purchased on January 1, 2019. It has been…

A: "Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: The market value of the property on the 31st of June 2026 is: The book value of the property on the…

A: Depreciation is the permanent and gradual decrease in the value of the asset over a period…

Q: Ehrlich Company purchased equipment in 2015 for $150,000 and estimated a $10,000 salvage value at…

A: Depreciation exp $3,500.00 To Accumulated Depreciation $3,500.00…

Q: Quigley Co. bought a machine on January 1, 2019 for $2,800,000. It had a $240,000 estimated residual…

Q: Sage purchased equipment on January 2, 2017, for $78,900. At that time, the equipment had an…

A: Depreciation is reducing the value of the tangible fixed asset. It is provided as the expense of the…

Q: On October 1, 2021, Hess Company places a new asset into service. The cost of the asset is $120,000…

A: Depreciation expense: Depreciation expense is the reduction in a particular asset due to its use or…

Q: On January 4, 2019, Columbus Company purchased new equipment for $693,000 that had a useful life of…

A: INTRODUCTION: The value of a fixed asset is diminished over the course of its useful life using a…

Q: Oregon Company is in the process of preparing its financial statements for 2024 Assume that no…

A: Lets understand the basics. Depreciation is a reduction in value of asset due to wear and tear,…

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.

Topic Video

Question

Cullumber Company had the following assets on January 1, 2022.
Useful Life
(in years)
Salvage Value
$ 0
Item
Cost
Purchase Date
Machinery
$72,000
Jan. 1, 2012
10
Forklift
31,000
Jan. 1, 2019
Truck
37,400
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 $12,100. The truck was discarded on December 31.
Journalize all entries required on the above dates, indluding 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. (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.)
Date
Account Titles and Explanation
Debit
Credit
(To record depreciation expense on forklift)
(To record sale of forklift)
(To record depreciation expense on truck)

Useful Life
Item
Cost
Purchase Date
(in years)
Salvage Value
Machinery
$72,000
Jan. 1, 2012
10
$ 0
Forklift
31,000
Jan. 1, 2019
Truck
37,400
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 $12,100. 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. (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.)
Date
Account Titles and Explanation
Debit
Credit
(To record depreciation expense on forklift)
(To record sale of forklift)
(To record depreciation expense on truck)
(To record sale of truck)
<>

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Lucky Lure Co. purchased a machine on October 1, 2018 for $125,000. It has a $15,000 residual value and a 10- year useful life. On July 1, 2020 the machine sold for $79,500. The company uses the double-declining-balance method of depreciation. The company fiscal year end is December 31. Instructions Prepare the journal entries for 2018 through 2020. Š A▾ B I
Bridgeport Company is in the process of preparing its financial statements for 2020. Assume that no entries for depreciation have been recorded in 2020. The following information related to depreciation of fixed assets is provided to you. 1. 2. 3. (a) Straight-line Declining-balance 48,000 Bridgeport purchased equipment on January 2, 2017, for $79,400. At that time, the equipment had an estimated useful life of 10 years with a $5,400 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2020, as a result of additional information, the company determined that the equipment has a remaining useful life of 4 years with a $2,900 salvage value. 1. During 2020, Bridgeport changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $300,000. It had a useful life of 10 years and a salvage value of $30,000. The following computations present depreciation on both bases for 2018 and 2019. 2. 2019 3.…
On June 15, 2024, Perfect Furniture discarded equipment that had a cost of $8,000, a residual value of $0, and was fully depreciated. Journalize the disposal of the equipment. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Jun. 15 Accumulated Depreciation-Equipment Cash Depreciation Expense-Equipment Equipment Gain on Disposal Loss on Disposal Maintenance Expenses Debit Credit
Whispering Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5 years; salvage value, $16,200 $503,700 Building, estimated service life, 30 years; no salvage value $648,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2021, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method. (a) Prepare the general journal entry to record depreciation expense for the equipment in 2021. (b) Prepare the journal entry to record depreciation expense for the building in 2021.
Marigold Industries presents you with the following information. Complete the table for the year ended December 31, 2027. The company depreciates all assets using the half-year convention. (Round answers to O decimal places, e.g. 45,892.) Description Machine A Machine B Machine C Machine D Date Purchased 2/12/25 8/15/24 7/21/23 Cost $148,200 89,600 227,760 (c) Salvage Value $16,640 21,840 25,000 71,760 Life in Years 10 5 8 5 Depreciation Method SL DDB SYD (a) Accumulated Depreciation to 12/31/26 $34,684 30,160 72,800 (e) Depreciation for 2027 (b) (d) (f) (h)
Whispering Company owns equipment that cost $100,000 when purchased on January 1, 2019. It has been depreciated using the straight-line method based on an estimated salvage value of $10,000 and an estimated useful life of 5 years. Depreciation expense adjustments are recognized annually. Instructions: Prepare Whispering Company's journal entries to record the sale of the equipment in these four independent situations. Update depreciation on assets disposed of at time of sale. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) (a) (b) (c) (d) (e) (f) (a) Sold for $59,000 on January 1, 2022. Sold for $59,000 on April 1, 2022. SR. Account Titles and Explanation (b) Sold for $21,000 on January 1, 2022. Sold for $21,000 on September 1, 2022. Repeat (a), assuming Whispering uses double-declining…
Dog
Concord Corporation purchased a new machine for its assembly process on August 1, 2025. The cost of this machine was $129,600. The company estimated that the machine would have a salvage value of $12,600 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 20,000 hours. Year-end is December 31. Compute the depreciation expense under the following methods. Each of the following should be considered unrelated. (Round depreciation rate per hour to 2 decimal places, e.g. 5.35 for computational purposes. Round your answers to O decimal places, e.g. 45,892.) (a) Straight-line depreciation for 2025 (b) (c) (d) Activity method for 2025, assuming that machine usage was 800 hours Sum-of-the-years'-digits for 2026 Double-declining-balance for 2026 $ $ LA $ 9,750 4,680 31,200 43,200
Tinker Bell Company sold a delivery wing truck on March 1, 2022. Tinker had acquired the wing truck on January 1, 2019, for $ 52,000. At acquisition, Tinker had estimated that the truck would have a useful life of 6 years and a residual value of $4,000. On December 31, 2021, the truck had a book value of $ 28,000. Required: Prepare the journal entries to recognized the depreciation expense for 2022 prior to the sale and the sale of the truck assuming the truck sold at the following different prices (you will have 3 entries total): $32,000 26,000
Oriole Company owns equipment that cost $120,000 when purchased on January 2, 2024. It has been depreciated using the straight- line method based on estimated residual value of $6,000 and an estimated useful life of five years. Following are the four independent situations. Assume depreciation has been recorded to the date of sale. (a) Prepare Oriole Company's journal entry to record the sale of the equipment for $55,100 on January 2, 2027. (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 Jan. 2 Debit Credit
Martinez Company is in the process of preparing its financial statements for 2020. Assume that no entries for depreciation have been recorded in 2020. The following information related to depreciation of fixed assets is provided to you. 1 Martinez purchased equipment on January 2, 2017, for $92,900. At that time, the equipment had an estimated useful life of 10 years with a $4,900 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2020, as a result of additional information, the company determined that the equipment has a remaining useful life of 4 years with a $2,900 salvage value. 2 During 2020, Martinez changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $280,000. It had a useful life of 10 years and a salvage value of $28,000. The following computations present…
On Jan 1, 2019, Tuesday company purchased a delivery vehicle costing $40,000. The vehicle has an estimated 9 year life and $4,000 residual value. What is vehicle's accumulated depreciation as of December 31, 2020? Assuming they use straight line depreciation method. Do not put any decimal places.