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Thomas Company - Thomas Company uses straight-line...

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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.
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Unformatted text preview: Thomas Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2005.) Solution Jan. 1 Accumulated Depreciation—Machinery $62,000 Machinery $62,000 June 30 Depreciation Expense $3,500 Accumulated Depreciation - Computer $3,500 ($35,000 X 1/5 X 6/12) 30 Cash $12,000 Accumulated Depreciation—Computer $23,500 ($35,000 X 3/5 = $21,000; $21,000 + $3,500) Gain on Disposal $500 [$22,000 – ($35,000 – $17,500)] Computer $35,000 Dec. 31 Depreciation Expense $5,000 Accumulated Depreciation—Truck $5,000 [($33,000 – $3,000) X 1/6] 31 Loss on Disposal $8,000 Accumulated Depreciation—Truck $25,000 [($33,000 – $3,000) X 5/6] Delivery Truck $33,000...
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