Question

On January 1 of the current year, Herkimer & Co. purchases, for cash, a group of seven laptops for its new hires. The laptops are purchased for $2,300 each with a residual value of $500 each. Herkimer expects the laptops to be used for 3 years. At the end of the current year, Herkimer & Co. sells two laptops for $1,800 each. Required: Prepare the journal entries to record the purchase of the laptops, the depreciation on the laptops, and the sale of the laptops in Year 1.

Answer 1

Date	Title	Debit	Credit
Jan-01	Laptops ($2,300*7)	$ 16,100
	Cash		$ 16,100
Dec-31	Depreciation expense ($2,300-$500)*7)/3)	$    4,200
	Accumulated depreciation		$    4,200
Dec-31	Cash	$    3,600
	Accumulated depreciation ($4,200/7*2)	$    1,200
	Gain on sale of assets		$200
	Laptops ($2,300*2)		$    4,600

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