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On January 2, 2023, Favorite Clothing Consignments purchased showroom fixtures for $18,000 cash, expecting the fixtures to remain in service for five years. Favorite has depreciated the fixtures on a double-declining-balance basis, with zero residual value. On October 31, 2024, Favorite sold the fixtures for $7,300 cash. Record both depreciation expense for 2024 and sale of the fixtures on October 31, 2024. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Note that 2023 depreciation was recorded and posted in 2023.) Begin by recording the depreciation expense for January 1, 2024 through October 31, 2024. Accounts and Explanation Date Oct. 31 Debit Credit

On January 2, 2023, Favorite Clothing Consignments purchased showroom fixtures for $18,000 cash, expecting the fixtures to remain in service for five years. Favorite has depreciated the fixtures on a double-declining-balance basis, with zero residual value. On October 31, 2024, Favorite sold the fixtures for $7,300 cash. Record both depreciation expense for 2024 and sale of the fixtures on October 31, 2024. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Note that 2023 depreciation was recorded and posted in 2023.) Begin by recording the depreciation expense for January 1, 2024 through October 31, 2024. Accounts and Explanation Date Oct. 31 Debit Credit

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Dont forget to  Select the explanation on the last line of the journal entry table.

### Educational Website Content: Depreciation and Journal Entry Recording **Scenario Overview:** On January 2, 2023, Favorite Clothing Consignments purchased showroom fixtures for $18,000 cash, with an expected service life of five years. The fixtures were depreciated using the double-declining-balance method, assuming zero residual value. On October 31, 2024, the fixtures were sold for $7,300 cash. The task is to record both the depreciation expense for the year 2024 and the sale of the fixtures on October 31, 2024. The depreciation for 2023 has already been recorded and posted. **Guided Steps for Journal Entry:** - **Calculate Depreciation for 2024:** - Determine the book value at the beginning of 2024. - Apply the double-declining-balance method to calculate the depreciation expense. - **Record Depreciation Expense (January 1, 2024 - October 31, 2024):** - Date: October 31 - Accounts involved will likely include: - Depreciation Expense (Debit) - Accumulated Depreciation (Credit) - **Record Sale of Fixtures (October 31, 2024):** - Accounts involved will include: - Cash (Debit) - Accumulated Depreciation (Debit) - Fixtures (Credit) - Gain or Loss on Sale of Fixtures (depending on the result, debit if loss, credit if gain) **Unfilled Table for Journal Entry:** | Date | Accounts and Explanation | Debit | Credit | |----------|--------------------------|-------|--------| | Oct. 31 | | | | | | | | | | | | | | | | | | | **Graphical Explanation:** - **Table Layout:** A tabular format is provided for recording debit and credit transactions related to the depreciation and sale of the fixtures. - **Columns:** The table is organized into columns for the date, accounts and explanation, debit, and credit, guiding the proper entry of each transaction component. By following these structured steps, students can accurately record depreciation and sales transactions in accounting records, enhancing their understanding of financial accounting principles.
Transcribed Image Text:### Educational Website Content: Depreciation and Journal Entry Recording **Scenario Overview:** On January 2, 2023, Favorite Clothing Consignments purchased showroom fixtures for $18,000 cash, with an expected service life of five years. The fixtures were depreciated using the double-declining-balance method, assuming zero residual value. On October 31, 2024, the fixtures were sold for $7,300 cash. The task is to record both the depreciation expense for the year 2024 and the sale of the fixtures on October 31, 2024. The depreciation for 2023 has already been recorded and posted. **Guided Steps for Journal Entry:** - **Calculate Depreciation for 2024:** - Determine the book value at the beginning of 2024. - Apply the double-declining-balance method to calculate the depreciation expense. - **Record Depreciation Expense (January 1, 2024 - October 31, 2024):** - Date: October 31 - Accounts involved will likely include: - Depreciation Expense (Debit) - Accumulated Depreciation (Credit) - **Record Sale of Fixtures (October 31, 2024):** - Accounts involved will include: - Cash (Debit) - Accumulated Depreciation (Debit) - Fixtures (Credit) - Gain or Loss on Sale of Fixtures (depending on the result, debit if loss, credit if gain) **Unfilled Table for Journal Entry:** | Date | Accounts and Explanation | Debit | Credit | |----------|--------------------------|-------|--------| | Oct. 31 | | | | | | | | | | | | | | | | | | | **Graphical Explanation:** - **Table Layout:** A tabular format is provided for recording debit and credit transactions related to the depreciation and sale of the fixtures. - **Columns:** The table is organized into columns for the date, accounts and explanation, debit, and credit, guiding the proper entry of each transaction component. By following these structured steps, students can accurately record depreciation and sales transactions in accounting records, enhancing their understanding of financial accounting principles.
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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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