Yahoo Answers is shutting down on May 4th, 2021 (Eastern Time) and beginning April 20th, 2021 (Eastern Time) the Yahoo Answers website will be in read-only mode. There will be no changes to other Yahoo properties or services, or your Yahoo account. You can find more information about the Yahoo Answers shutdown and how to download your data on this help page.
Trending News
Please help me solve this depreciation problem!?
Beta Co. whose accounting year ends 0n Dec. 31, purchased a computer system on july 1, 2003 for $1,600,00.00 and sold it on june 30th 2007 for $500,000.00 cash. The sum of years digits method was used to depreciate based on 6 year life expectancy and salvage value of $130,000.00. what are the journal entries to record 2007 depreciation and the sale of the asset? Help Please I am lost!!!!
1 Answer
- SandyLv 71 decade agoFavorite Answer
Depreciable cost = Cost - Salvage value = $1,470,000
Useful life is 6 yrs, so your denominator is 6+5+4+3+2+1= 21
Computer was bought on July 1, 2003
Depn for y/e June 30, 2004 = 6/21 x $1,470,000 = $420,000
Depn for y/e June 30, 2005 = 5/21 x $1,470,000 = $350,000
Depn for y/e June 30, 2006 = 4/21 x $1,470,000 = $280,000
Depn for y/e June 30, 2007 = 3/21 x $1,470,000 = $210,000
Depn stops after this since the computer was sold on June 30, 2007. At this point, accum. depn. is $1,260,000 and net book value is $340,000.
Dr Cash $500,000
Dr Accum. depn. $1,260,000
Cr Computer $1,600,000
Cr Gain on disposal of computer $160,000
