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Kisachek [45]
3 years ago
14

On December 29, 2019, Patel Products, Inc., sells a delivery van that cost $20,000. After recording the entry to bring the accum

ulated depreciation up-to-date, the delivery van had accumulated depreciation of $18,000. Patel received $2,000 cash from the purchaser of the delivery van. Complete the necessary journal entry to record the sale by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Business
1 answer:
Nataliya [291]3 years ago
4 0

Answer:

On disposal, the carrying amount of the asset is derecognized by  

Debit Other income/disposal account (p/l)   $20,000

Credit Asset account     $20,000

Being entries to derecognize the cost of the delivery van

Debit Accumulated depreciation account  $18,000

Credit Other income/disposal account (p/l)   $18,000

Being entries to derecognize the accumulated depreciation of the asset at the date of disposal,

Furthermore,

Debit Cash account    $2,000

Credit Other income/disposal account (p/l)   $2,000

Being entries to record cash collected on  disposal of the asset

Explanation:

When the amount received from the disposal of an asset is higher than the carrying value of the asset, the company makes a gain on disposal. The proceed from the disposal of an asset may be recorded in the disposal or other income account.

On disposal, the carrying amount of the asset is derecognized by  

Debit Other income/disposal account (p/l)

Credit Asset account  

with the cost of the asset, then,

Debit Accumulated depreciation account

Credit Other income/disposal account (p/l)

With the accumulated depreciation of the asset at the date of disposal,

Furthermore,

Debit Cash account

Credit Other income/disposal account (p/l)

with the amount received from the disposal or sale of the asset

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a. People respond to incentives.

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7 0
2 years ago
Electronic Distribution has a defined benefit pension plan. Characteristics of the plan during 2021 are as follows: ($ millions)
ruslelena [56]

Answer:

Please see below

Explanation:

1. Calculate the pension expense for 2021.

($ millions)

Service cost. $50

Interest cost. $30

Expected return on the plan assets

(1,300 × 6%). ($78)

Amortization of prior service cost $

Amortization of net gain or loss - AOCI $

Pension expense $2

2. Journal expense to record pension expense, gains or losses, prior service cost, funding and payment of benefits for 2021.

1.

Pension expense. Dr $2

Plan assets [expected return on assets] Dr $78

To PBO (50 + 30) Cr $80

(To record the pension expense)

2.

Prior service cost - OCI Dr $18

To PBO Cr $18

(To record the prior service cost)

3.

PBO Dr $36

To Gain - OCI Cr $36

(To record the gain from change in actuarial assumption)

4.

Loss- OCI [1,300 × 6%] - ($23). Dr $55

To Plan assets Cr. $55

(To record the gain or loss on assets)

5.

Plan assets. Dr $40

To Cash Cr. $40

(To record the funding)

6.

PBO Dr $46

To Plan assets. Cr 46

(To record the retiree benefits)

3. What amount will electronic distribution report in its 2021 balance sheet as a net pension asset or net pension liability.

PBO balance, Jan 1 $530

Service cost. $50

Interest cost. $30

Gain from change in actuarial assumption. ($36)

Prior service cost(New). $18

Benefit paid ($46)

PBO balance, December 31. $546

Plan assets balance, Jan 1. $300

Actual return on plan assets $23

Contributions $40

Benefits paid ($46)

Plan assets balance, December 31 $317

PBO balance, December 31 $546

Plan assets balance, December 31 $317

Net pension liability. $229

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Answer:

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Explanation:

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