Answer:
The gain on sale of asset is of $800
Explanation:
The depreciation of the asset is computed as:
Annual depreciation = Original Cost - Estimated residual value / Useful life of the asset
= $40,000 - $6,000 / 5
= $34,000 / 5
= $6,800 per year
So, the depreciation for 2 years will be $13,600 ($6,800 + $6,800).
After 2 years, the value of the asset will be:
= Cost - Depreciation for 2 years
= $40,000 - $13,600
= $26,400
Now, we will compute the gain or loss on sale as:
Gain or loss on sale = The value of asset after 2 years - Sale value
= $26,400 - $25,600
= $800 (Gain).
So, there is gain of $800 on sale of the assets after 2 years.
Answer:
The journal entries are as follows:
(i) On December 31, 2017
Unrealized gain or loss income A/c Dr. $10,800
To estimated purchase commitment liability $10,800
(To record other income and expenses)
Workings:
Unrealized gain or loss income = 36,000 × ($3 - $2.7)
= 36,000 × $0.3
= $10,800
(ii) On January 1, 2018
Raw material A/c (36,000 × $2.7) Dr. $97,200
Estimated purchase commitment liability A/c Dr. $10,800
To accounts payable $108,000
(To record the materials received in January 2018)
Answer:
C. Debit Buildings; Credit Notes Payable.
Explanation:
The journal entry to record the given transaction is shown below:
Building A/c Dr XXXXX
To Notes Payable A/c XXXXX
(Being the building is purchased)
Since the building is purchased which increases the value of the asset so the building account is debited and the payment is done by borrowing amount from the bank i.e note payable so this account would be credited