Question

Here are selected 2017 transactions of Novak Corporation. Jan. 1 Retired a piece of machinery that was purchased on January 1, 2007. The machine cost $61,400 and had a useful life of 10 years with no salvage value. June 30 Sold a computer that was purchased on January 1, 2015. The computer cost $35,600 and had a useful life of 4 years with no salvage value. The computer was sold for $4,700 cash. Dec. 31 Sold a delivery truck for $9,500 cash. The truck cost $24,100 when it was purchased on January 1, 2014, and was depreciated based on a 5-year useful life with a $3,300 salvage value. Journalize all entries required on the above dates, including entries to update depreciation on assets disposed of, where applicable. Novak Corporation uses straight-line depreciation.

Answer 1

Answer:

dep expense 4,450 debit

   acc depreciation computer    4,450 credit

to record depreciation for the computer

cash                                      4,700  debit

acc depreciation               22,250 debit

loss on disposal                  9,250 debit

    computer                                      35,600 credit

to record sale of computer

dep expense 4,160 debit

acc depreciation truck   4,160 credit

to record depreciation expense for the truck 2017

cash                             9,500

acc depreication        16,640

gain on disposal                        2,040

truck                                          24,100

to record sale of a truck

Explanation:

Computer:

35,600 / 4 = 8,900 depreciation per year

depreciation for 2017

january to june 30th --> half a year so half depreciation

8,900 / 2 = 4,450

then we do the sale of the computer

acc depreciation

from jan 1st 2015 to june 30th 2017

2 and a half year

8,900 + 8,900 + 4,450 =  $22,250.00

book value 35,600 - 22,250  = 13,350

proceeds                                     4,700

loss on disposal                          9,250

truck

Acquisition Value 24100

Salvage Value 3300

ammount subject to depreciation 20800

Useful Life 5

depreciation per year 4160

We need to do the entry for the depreication for the year.

Then we calcualte the gain/loss on disposal

accumualted from jan 2014 to dec 31th 2017

4 years

4,160 x 4 = 16,640

book value 24.100 - 16,640 = 7,460

proceeds                                9,500

gain on disposal                      2040