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Jounral Entries for Depreciation and Asset disposal

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Presented below are selected transactions at Thomas Company for 2006.

Jan. 1 Retired a piece of machinery that was purchased on January 1, 1996. The machine cost $62,000 on that date. It had a useful life of 10 years with no salvage value.

June 30 Sold a computer that was purchased on January 1, 2003.The computer cost $35,000. It had a useful life of 5 years with no salvage value. The computer was sold for $12,000.

Dec. 31 Discarded a delivery truck that was purchased on January 1, 2002. The truck cost $33,000. It was depreciated based on a 6-year useful life with a $3,000 salvage value.

Instructions

Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on assets disposed of. Thomas Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2005.)

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Solution Summary

The solution shows how to prepare journal entries for assets being disposed.

The treatment of depreciation is also highlighted.

$2.19