Question

The property, plant, and equipment section of the Jasper Company's December 31, 2017, balance sheet contained the following: Property, plant, and equipment: $129,000 Land Building Less: Accumulated depreciation $1,029,000 (245,000) 204,975 784,000 Equipment Less: Accumulated depreciation ? Total property, plant, and equipment The land and building were purchased at the beginning of 2013. Straight-line depreciation is used and a residual value of $49,000 for the building is anticipated. The equipment is comprised of the following three machines: Residual Life in Machine Date Acquired 1/1/15 6/30/16 Cost Value Years 101 $79,900 $7,900 10 102 88,100 36,975 8,900 3,900 8 9/1/17 103 The straight-line method is used to determine depreciation on the equipment. On March 31, 2018, Machine 102 was sold for $58,000. Early in 2018, the useful life of machine 101 was revised to seven years in total, and the residual value was revised to zero. Required: 1. Calculate the accumulated depreciation on the equipment at December 31, 2017 2. Prepare the journal entry to record 2018 depreciation on machine 102 up to the date of sale. 3. Prepare a schedule to calculate the gain or loss on the sale of machine 102. 4. Prepare the journal entry for the sale of machine 102 5. Prepare the 2018 year-end journal entries to record depreciation on the building and equipment.

Answer 1

1) Accumulated depreciation on the equipment at December 31, 2017:

machine 101 = [(79900 - 7900)/10 ] * 3 = 21600

machine 102 = (88100 - 8900)*/8] * 1.5 = 14850

machine 103 =  (36975 - 3900)/9] * 4/12 = 1225

Accumulated depreciation = 21600 + 14850 + 1225 = 37675

2)

Date	Particulars	Debit	Credit
31-Mar-17	Depreciation expense [9900*3/12]	2475
	Accumulated depreciation equipment		2475

3)

sale proceeds		58000
Less:
Cost	88100
Accumulated depreciation [14850 +2475 ]	(17325)	(70775)
Loss on sale		(12775)

4)

Date	Particulars	Debit	Credit
31-Mar-17	Cash	58000
	Accumulated depreciation equipment [14850 +2475 ]	17325
	Loss on sale of equipment	12775
	Equipment		88100

5)

Date	Particulars	Debit	Credit
31-Mar-18	Depreciation expense [245000 / 5]	49000
	Accumulated depreciation building		49000

Date	Particulars	Debit	Credit
31-Mar-18	Depreciation expense [(58300/4) +3675]	18250
	Accumulated depreciation equipment		18250