On march 31 2011 the herzog company purchased a factory, Ask an Expert

Accounting

On March 31, 2011, the Herzog Company purchased a factory complete with machinery and equipment. The allocation of the total purchase price of $1,000,000 to the various types of assets along with estimated useful lives and residual values are as follows
Assets Costs Estimated Residual Value Estimated Useful Life in Years

land 100000 n/a n/a
building 500000 none 25
machinery 240000 10% of cost 8
equiptment 160000 13000 6
Total 1,000,000

On June 29, 2012, machinery included in the March 31, 2011, purchase that cost $100,000 was sold for $80,000. Herzog uses the straight-line depreciation method for buildings and machinery and the sum-of-the-years'-digits method for equipment. Partial-year depreciation is calculated based on the number of months an asset is in service

Required: Prepare the journal entries to record (1) depreciation on the machinery sold on June 29, 2012, and (2) the sale of machinery

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9981921

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