Question

On January 2, 2017 Repeat Cling Consignment purchased showroom futures for $11.000 expecting the futures to remain in service for five years. Repeat has deprecated the fixtures on a double-declining-balance basis with zero residual value. On August 31, 2018, Repeat sold the fures for 55.000 cash. Record both depreciation expense for 2018 and sale of the fixtures on August 31, 2018. (Record debitis first, then credits. Select the explanation on the last ine of the journal entry table. Note that 2017 depreciation was recorded and posted in 2017.) Master- Begin by recording the depreciation expense for January 1, 2018 through August 31, 2018 Date Accounts and Explanation Aug 31 Depreciation ExpenseFitures Accumulated Depreciation --Fictures To record depreciation on factures Before recording the sale of the future 's calculate any gain or loss on the sale of the Blues Market value of assets received Enter any number in the edited and then click Check Answer

Answer 1

Double decling balance depreciation rate is = (100%/5)*2 - 40% Depreciation for first year is = (11000*40%) = 5 4,400/. Depreciation from 1st January 2018 to 31 August 2018 is = (11000-4400)*40%*(8/12) Depreciation from 1st January 2018 to 31 August 2018 is = $ 1,760/. Journal entry : Date Accounts Title & Explanation Debit S Credit S 31-Aug-18 Depreciation expense - Fixtures 1,760 To Accumulated Depreciation - Fixtures 1,760 (Entry for recording of depreciation expense for 2018) Gain or loss on sale of fixtures :- Book value on date of sale = (11000-4400-1760) Book value on date of sale = 5 4,840/. Sale value of fixtures is = 5 5,000/. Gain on sale of fixtures is = (5000-4840) Gain on sale of fixtures is = $ 160/. 5,000 Market value of asste received Less: Book value of assets disposed off Cost Less: Accumulated depreciation 11,000 6,160 4,840 160 Gain or (loss)