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
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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

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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.

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)
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