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Wiley PLUS Assignment Week 2 Exercise E9-9

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Wiley PLUS Assignment Week 2 Exercise E9-9
Presented below are selected transactions at Ingles Company for 2011.
Jan. 1 Retired a piece of machinery that was purchased on January 1, 2001. The machine cost $62,000 on
that date. It had a useful life of 10 years with no salvage value. (Assume depreciation is up to date as
of December 31, 2010.)
June 30 Sold a computer that was purchased on January 1, 2008. The computer cost $40,000. It had a useful
life of 5 years with no salvage value. The computer was sold for $14,000.
Dec. 31 Discarded a delivery truck that was purchased on January 1, 2007. The truck cost $39,000. It was
depreciated based on a 6-year useful life with a $3,000 salvage value.
Journalize all entries required on the above dates, including entries to update depreciation, where
applicable, on assets disposed of. Ingles Company uses straight-line depreciation.(For multiple
Date Account/Description Debit Credit
Jan. 1 Accumulated depreciation-Machinery 62000
Machinery 62000
June 30 Depreciation expense 4000
Accumulated depreciation-Computer 4000
(To update depreciation)
June 30 Accumulated depreciation-Computer 28000
Cash 14000
Computer 40000
Gain on disposal 2000
Dec. 31 Depreciation expense 6000
Accumulated depreciation-Truck 6000
(To update depreciation)
Dec.31 Accumulated depreciation-Truck 30000
Loss on disposal 9000
Delivery truck 39000

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DateAccount/DescriptionDebitCreditJan. 1Accumulated Depreciation-
Machinery62,000 Machinery 62,000 June 30Depreciation Expense4,000
Accumulated Depreciation-Computer
($40,000 × 1/5 × 6/12) 4,000 June 30Accumulated Depreciation-Computer
($40,000 × 3/5 = $24,000; $24,000 + $4,000)28,000 Cash14,000 Computer 40,000
Gain on Disposal 2,000 Dec. 31Depreciation Expense6,000 Accumulated Depreciation-
Truck
[($39,000 - $3,000) × 1/6] 6,000 Dec.31Accumulated Depreciation-Truck [($39,000 -
$3,000) × 5/6]30,000 Loss on Disposal9,000 Delivery Truck 39,000

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