
Concept explainers
Introduction:
Asset is a term used to define a resource owned by a company against which some income will earn in near future and that income will expressed in monetary terms. Recording of an asset is done via
To determine:
Journalize the entries of the events occurred

Explanation of Solution
Journal entry will be recorded as under:
In the books of Yoshi company
| | | $ | $ |
01.01.2014 | Truck A/c | Dr. | 22000 | |
| To Cash A/c | Cr. | | 22000 |
| (Being asset recorded) | | | |
| | | | |
31.12.2014 | Depreciation Expense A/c | Dr. | 4000 | |
| To | Cr. | | 4000 |
| (Being Depreciation on Asset (Truck) recorded) | | | |
| | | | |
31.12.2015 | Depreciation Expense A/c | Dr. | 5200 | |
| To Accumulated Depreciation A/c | Cr. | | 5200 |
| (Being Depreciation on Asset (Truck) recorded) | | | |
| | | | |
31.12.2016 | Depreciation Expense A/c | Dr. | 5200 | |
| To Accumulated Depreciation A/c | Cr. | | 5200 |
| (Being Depreciation on Asset (Truck) recorded) | | | |
| | | | |
31.12.2016 | Cash A/c | Dr. | 5300 | |
| Loss on sale of Truck A/c | Dr. | 2300 | |
| To Trucks A/c | Cr. | | 7600 |
| (Being Truck sold in cash recorded) | | | |
Explanation:
Year 2014
Given:
Cost of Asset for the year 2014 is $ 22000,
Residual value is $ 2000,
Useful life of Truck is 5 Years
Formula used:
For computation of cost of Truck
Cost of Truck | $ |
Original value of asset at the beginning of year | xxxx |
Add: Expenditure capitalized during the year | xxxx |
Less: Depreciation for the year | xxxx |
Asset value at the end of year | xxxx |
For calculating Depreciation under straight line method
Cost of Asset- Residual Value
Useful life of Asset
Calculation:
*Computation of Cost of Truck
Cost of Truck | $ |
Cash | 20515 |
Sales tax | 1485 |
Total | 22000 |
$ 22000- $ 2000
5
$ 20000/5
$ 4000
Year 2015
Given:
Cost of Asset for the year 2015 is $ 18000,
Residual value is $ 2400,
Useful life of truck reduced from 5 years to 4 years, as one year already passed so remaining useful life is 3 years in the year 2015
Formula used:
For computation of cost of Truck
Cost of Truck | $ |
Original value of asset at the beginning of year | xxxx |
Add: Expenditure capitalized during the year | xxxx |
Less: Depreciation for the year | xxxx |
Asset value at the end of year | xxxx |
For calculating Depreciation under straight line method
Cost of Asset- Residual Value
Useful life of Asset
Calculation:
*Computation of Cost of Truck
Cost of Truck | $ |
Asset value in the year 2014 | 22000 |
Less: Depreciation for the year 2014 | 4000 |
Asset value at the beginning of year 2015 | 18000 |
$ 18000- $ 2400
3
$ 15600/3
$ 5200
Year 2016
Given:
Cost of Asset for the year 2016 is $ 12800,
Residual value is $ 2400,
Remaining useful life of Truck is 2 years in year 2016
Formula used:
For computation of cost of Truck
Cost of Truck | $ |
Original value of asset at the beginning of year | xxxx |
Add: Expenditure capitalized during the year | xxxx |
Less: Depreciation for the year | xxxx |
Asset value at the end of year | xxxx |
For calculating Depreciation under straight line method
Cost of Asset- Residual Value
Useful life of Asset
Formula for calculating profit or loss on sale of asset
Calculation of profit or loss on sale of asset | $ |
Original value of asset | xxxx |
Less: Depreciation for the used period | xxxx |
Asset value at the time of sale | xxxx |
Less: Sale value | xxxx |
Profit / Loss on sale of Asset | xxxx |
Calculation:
*Computation of Cost of Truck
Cost of Truck | $ |
Asset value in the year 2015 | 18000 |
Less: Depreciation for the year 2015 | 5200 |
Asset value at the beginning of year 2016 | 12800 |
$ 12800- $ 2400
2
$ 10400/2
$ 5200
*Computation of Cost of Truck at the time of sale
Cost of Truck | $ |
Truck value at the beginning of year 2016 | 12800 |
Less: Depreciation for the year 2016 | 5200 |
Truck value at the time of sale | 7600 |
Sale of Truck in Cash | 5300 |
Loss on sale of Truck ($ 7600- $ 5300) | 2300* |
*Loss on sale of truck will be recorded as expenses under Profit & Loss A/c
Events and transaction are recorded in the form of journal entries as and when it occurred.
Want to see more full solutions like this?
Chapter 10 Solutions
FUND.ACCT.PRIN -ONLINE ONLY >I<
- Questin 5arrow_forwardBelle Garments manufactures customized T-shirts for football teams. The business uses a perpetual inventory system and has a highly labour-intensive production process, so it assigns manufacturing overhead based on direct labour cost. The business operates at a profit margin of 33% on sales. Belle Garments expects to incur $2,205,000 of manufacturing overhead costs and estimated direct labour costs of $3,150,000 during 2025. At the end of December 2024, Belle Line Garments reported work in process inventory of $93,980 - Job FBT 101 - $51,000 & Job FBT 102 - $42,980 The following events occurred during January 2025. i) Purchased materials on account, $388,000. The purchase attracted freight charges of $4,000 ii) Incurred manufacturing wages of $400,000 iii) Requisitioned direct materials and used direct labour in manufacturing. Job # FBT 101 FBT 102 FBT 103 FBT 104 Direct Materials $70,220 97,500 105,300 117,000 iv) Issued indirect materials to production, $30,000. Direct Labour $61,200…arrow_forwardThe trial balance for K and J Nursery, Incorporated, listed the following account balances at December 31, 2024, the end of its fiscal year: cash, $27,000; accounts receivable, $22,000; inventory, $36,000; equipment (net), $91,000; accounts payable, $25,000; salaries payable, $10,500; interest payable, $6,500; notes payable (due in 18 months), $41,000; common stock, $72,000. Determine the year-end balance in retained earnings for K and J Nursery, Incorporated.arrow_forward
- Brun Company produces its product through two processing departments: Mixing and Baking. Information for the Mixing department follows. Direct Materials Conversion Unit Percent Complete Percent Complete Beginning work in process inventory 7.500 Units started this period 104,500 Units completed and transferred out 100.000 Ending work in process inventory 12.000 100% 25% Beginning work in process inventory Direct materials Conversion $6.800 14.500 $21.300 Costs added this period Drect materials 116,400 Conversion Total costs to account for 1.067,000 1.183.400 $1.204.700 Required 1. Prepare the Mixing department's production cost report for November using the weighted average method Check (1) C$1.000 2. Prepare the November 30 journal entry to transfer the cost of completed units from Mixing to Bakingarrow_forwardNonearrow_forwardNot need ai solution please solve this general accounting questionarrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





