Presented below are selected transactions at Splish Brothers Inc. for 2020. Jan. 1 Retired a piece of machinery that was purchased on January 1, 2010. The machine cost $63,800 on that date. It had a useful life of 10 years with no salvage value. June 30 Sold a computer that was purchased on January 1, 2017. The computer cost $37,800. It had a useful life of 5 years with no salvage value. The computer was sold for $15,100. Dec. 31 Discarded a delivery truck that was purchased on January 1, 2016. The truck cost $40,620. It was depreciated based on a 6-year useful life with a $3,000 salvage value. Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on assets disposed of. Splish Brothers Inc. uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2019.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Do not round intermediate calculations.) Date Account Titles and Explanation Debit Credit choose a transaction date enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount choose a transaction date enter an account title to record depreciation to date of disposal enter a debit amount enter a credit amount enter an account title to record depreciation to date of disposal enter a debit amount enter a credit amount (To record depreciation to date of disposal) June 30 enter an account title to record sale of computer enter a debit amount enter a credit amount enter an account title to record sale of computer enter a debit amount enter a credit amount enter an account title to record sale of computer enter a debit amount enter a credit amount enter an account title to record sale of computer enter a debit amount enter a credit amount (To record sale of computer) choose a transaction date enter an account title to record depreciation to date of disposal enter a debit amount enter a credit amount enter an account title to record depreciation to date of disposal enter a debit amount enter a credit amount (To record depreciation to date of disposal) Dec. 31 enter an account title to record retirement of truck on December 31 enter a debit amount enter a credit amount enter an account title to record retirement of truck on December 31 enter a debit amount enter a credit amount enter an account title to record retirement of truck on December 31 enter a debit amount enter a credit amount (To record retirement of truck)
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.
Presented below are selected transactions at Splish Brothers Inc. for 2020.
| Jan. | 1 | Retired a piece of machinery that was purchased on January 1, 2010. The machine cost $63,800 on that date. It had a useful life of 10 years with no salvage value. | |
| June | 30 | Sold a computer that was purchased on January 1, 2017. The computer cost $37,800. It had a useful life of 5 years with no salvage value. The computer was sold for $15,100. | |
| Dec. | 31 | Discarded a delivery truck that was purchased on January 1, 2016. The truck cost $40,620. It was |
Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on assets disposed of. Splish Brothers Inc. uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2019.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record
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Date |
Account Titles and Explanation |
Debit |
Credit |
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choose a transaction date |
enter an account title |
enter a debit amount |
enter a credit amount |
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enter an account title |
enter a debit amount |
enter a credit amount |
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choose a transaction date |
enter an account title to record depreciation to date of disposal |
enter a debit amount |
enter a credit amount |
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enter an account title to record depreciation to date of disposal |
enter a debit amount |
enter a credit amount |
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(To record depreciation to date of disposal) |
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June 30 |
enter an account title to record sale of computer |
enter a debit amount |
enter a credit amount |
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enter an account title to record sale of computer |
enter a debit amount |
enter a credit amount |
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enter an account title to record sale of computer |
enter a debit amount |
enter a credit amount |
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enter an account title to record sale of computer |
enter a debit amount |
enter a credit amount |
|
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(To record sale of computer) |
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choose a transaction date |
enter an account title to record depreciation to date of disposal |
enter a debit amount |
enter a credit amount |
|
enter an account title to record depreciation to date of disposal |
enter a debit amount |
enter a credit amount |
|
|
(To record depreciation to date of disposal) |
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Dec. 31 |
enter an account title to record retirement of truck on December 31 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record retirement of truck on December 31 |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record retirement of truck on December 31 |
enter a debit amount |
enter a credit amount |
|
|
(To record retirement of truck) |
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