Total Depreciation
17. Howarth Manufacturing Company purchased a lathe on June 30, 2007, at a cost of $80,000. The residual value of the lathe was estimated to be $5,000 at the end of a five-year life. The lathe was sold on March 31, 2011, for $17,000. Howarth uses the straight-line depreciation method for all of its plant and equipment. Partial-year depreciation is calculated based on the number of months the asset is in service. Prepare the journal entry to record the sale.
Assuming the company’s year end is March 31.
Depreciation for 2007-08: ((80000-5000)/5) X 9/12 = 11250
Depreciation for 2008-09: ((80000-5000)/5) = 15000
Depreciation for 2009-10: ((80000-5000)/5) = 15000
Depreciation for 2010-11: ((80000-5000)/5) = 15000
Total Depreciation 46250
Carrying Value on date of sale, ie March 31, 2011 = 80000-46250 =33750
Loss on sale is 33750 – 17000 = 16750
Journal Entry:
Cash Debit 17000
Loss on Sale of Machine Debit 16750
Accumulated Depreciation Debit 46250
Machine Credit 80000
20. Carnellian sold a piece of equipment for Rs. 30,000 on July 1, 2003. The equipment was purchased January 1, 2000 with an original cost of Rs. 50,000 and a 10 year life. Prepare journal entry for the above transaction assuming that the company calculates depreciation using the double declining method of depreciation.
Assuming the company’s year end is March 31:
Depreciation for 2000-01 for three months:50000/10 X 3/12 = 1250
Depreciation for 2001-02 for entire year: 5000
Depreciation for 2002-03 for entire year: 5000
Depreciation for 2003-04 for four months: 50000/10 X 3/12 = 1250
Total Depreciation = 12500
Carrying Value on date of sale: 50000 – 12500 = 37500
Loss on sale of equipment 37500 – 30000 = 7500
Journal Entry
Cash Debit 30000
Loss on Sale of Equipment Debit 7500
Accumulated Depreciation Debit 12500
Equipment Credit 50000
21. WD Mining Company purchased a section of land for $600,000 in 2000 to develop a zinc mine. The mine began
Assuming the company’s year end is March 31.
Depreciation for 2007-08: ((80000-5000)/5) X 9/12 = 11250
Depreciation for 2008-09: ((80000-5000)/5) = 15000
Depreciation for 2009-10: ((80000-5000)/5) = 15000
Depreciation for 2010-11: ((80000-5000)/5) = 15000
Total Depreciation 46250
Carrying Value on date of sale, ie March 31, 2011 = 80000-46250 =33750
Loss on sale is 33750 – 17000 = 16750
Journal Entry:
Cash Debit 17000
Loss on Sale of Machine Debit 16750
Accumulated Depreciation Debit 46250
Machine Credit 80000
20. Carnellian sold a piece of equipment for Rs. 30,000 on July 1, 2003. The equipment was purchased January 1, 2000 with an original cost of Rs. 50,000 and a 10 year life. Prepare journal entry for the above transaction assuming that the company calculates depreciation using the double declining method of depreciation.
Assuming the company’s year end is March 31:
Depreciation for 2000-01 for three months:50000/10 X 3/12 = 1250
Depreciation for 2001-02 for entire year: 5000
Depreciation for 2002-03 for entire year: 5000
Depreciation for 2003-04 for four months: 50000/10 X 3/12 = 1250
Total Depreciation = 12500
Carrying Value on date of sale: 50000 – 12500 = 37500
Loss on sale of equipment 37500 – 30000 = 7500
Journal Entry
Cash Debit 30000
Loss on Sale of Equipment Debit 7500
Accumulated Depreciation Debit 12500
Equipment Credit 50000
21. WD Mining Company purchased a section of land for $600,000 in 2000 to develop a zinc mine. The mine began