Question

The Ryan Corporation uses the composite method and its composite rate is 7.5% per year. The entry that should be made when plant assets that originally cost $80,000 and have been used for 10 years are sold for $24,000, is

Answer 1

Answer:

Under composite method, the accumulated depreciation account is debited or credited for the difference between the cost of the asset and the cash received from the retirement of the asset.

The journal entry to record the transaction is as below

Date   Account and Explanation                    Debit          Credit

          Cash                                                     $24,000

          Accumulated depreciation - Plant      $56,000

                   Plant assets                                                     $80,000

          (To record sale of plant assets)