Question

Question Help The Sawyer Group sold one of its plant assets on August 1 of the current year for $500,000. The asset had an original cost of $900,000 and an estimated residual value of $18,000. Sawyer used the straight-line method of depreciation assuming an estimated useful life of twelve years. The asset was in service for five years as of January 1 of the current year. Read the requirements Requirement a. Prepare the journal entry required to record the depreciation for the current year. (Record debits first, then credits. Exclude explanations from any journal entries.) Account August 1 Requirement b. Prepare the journal entry required to record the sale of the asset. (Record debits first, then credits. Exclude explanations from any journal entries.) Account August 1 Requirements a. Prepare the journal entry required to record the depreciation for the current year. b. Prepare the journal entry required to record the sale of the asset. (Do not round intermediary calculations.) Print Done Choose from any list or enter any number in the input fields and then continue to the next question.

Answer 1

Depreciation = Original value - salvage value / Original life

Depreciation = 900000 - 18000 / 12

Depreciation =73500 per year

So accumulated Depreciation for 5 years = 73500 x 5 = 367500

Depreciation for current year = 73500 / 12 x 7 = 42875

Total accumulated Depreciation on the date of sale = 410375

Entries

Depreciation Account Dr 42875

To accumulated Depreciation 42875

Being depreciation charged in current year

Cash account Dr 500000

accumulated Depreciation Dr 410375

To Asset Account 900000

To Gain on disposal of assets 10375 (Balancing Figure )

Being asset sold