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Journal Entries for Thomas Company and Yosuke Corporation: Depreciation

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.)

The following are selected 2006 transactions of Yosuke Corporation.

Jan. 1 Purchased a small company and recorded goodwill of $150,000. Its useful life is indefinite.
May 1 Purchased for $60,000 a patent with an estimated useful life of 5 years and a legal life of 20 years.

Instructions

Prepare necessary adjusting entries at December 31 to record amortization required by the events above.

Solution Preview

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 ...

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