On January 1 of the current year, Herkimer & Co. purchases, a group of 7 laptops for its new hires. The laptops are purchased for $2,300 each with a residual value of $500 each. Herkimer expects the laptops to be used for 3 years. At the end of the current year, Herkimer & Co. sells two laptops for $1,700 each. Required: Prepare the journal entries to record the purchase of the laptops, the depreciation on the laptops, and the sale of the laptops in Year 1.
On January 1 of the current year, Herkimer & Co. purchases, a group of 7 laptops for its new hires. The laptops are purchased for $2,300 each with a residual value of $500 each. Herkimer expects the laptops to be used for 3 years. At the end of the current year, Herkimer & Co. sells two laptops for $1,700 each. Required: Prepare the journal entries to record the purchase of the laptops, the depreciation on the laptops, and the sale of the laptops in Year 1.
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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On January 1 of the current year, Herkimer & Co. purchases, a group of 7 laptops for its new hires. The laptops are purchased for $2,300 each with a residual value of $500 each. Herkimer expects the laptops to be used for 3 years. At the end of the current year, Herkimer & Co. sells two laptops for $1,700 each.
Required:
| Prepare the |
Transcribed Image Text:DATE
DEBIT
REDIT
Jan. 1 Laptops
16,100.00
Cash
16,100.00
Dec. 31
Cash
3,400.00
Accumulated Depreciation
1,700.00
Laptops
16,100.00
Dec. 31
Depreciation Expense
4,200.00
Accumulated Depreciation
4,200.00
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