Question
Assume that Gonzalez Company purchased an asset on January 1, 2015, for $60,000. The asset had an estimated life of six years and an estimated
Assume that Gonzalez Company purchased an asset on January 1, 2015, for $60,000. The asset had an estimated life of six years and an estimated residual value of $6,000. The company used the straight-line method to depreciate the asset.
Assume that Gonzalez Company sold the asset on July 1, 2017, and received $10,000 cash and a note for an additional $20,000.
Required:
1. Identify and analyze the effect of the transaction for depreciation for 2017.
| Activity | |
| Accounts | |
| Statement(s) |
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | ||||||
| fill in the blank 661c9b003ff302e_2 | fill in the blank 661c9b003ff302e_4 | fill in the blank 661c9b003ff302e_5 | fill in the blank 661c9b003ff302e_7 | fill in the blank 661c9b003ff302e_9 | fill in the blank 661c9b003ff302e_10 | |||||||||
Identify and analyze the effect of the sale of the asset.
| Activity | |
| Accounts | |
| Statement(s) |
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | ||||||
| fill in the blank c7c4e707a042003_2 | fill in the blank c7c4e707a042003_4 | fill in the blank c7c4e707a042003_5 | fill in the blank c7c4e707a042003_7 | fill in the blank c7c4e707a042003_9 | fill in the blank c7c4e707a042003_10 | |||||||||
| fill in the blank c7c4e707a042003_12 | fill in the blank c7c4e707a042003_14 | fill in the blank c7c4e707a042003_15 | fill in the blank c7c4e707a042003_17 | fill in the blank c7c4e707a042003_19 | fill in the blank c7c4e707a042003_20 | |||||||||
| fill in the blank c7c4e707a042003_22 | fill in the blank c7c4e707a042003_24 | fill in the blank c7c4e707a042003_25 | fill in the blank c7c4e707a042003_27 | fill in the blank c7c4e707a042003_29 | fill in the blank c7c4e707a042003_30 | |||||||||
| fill in the blank c7c4e707a042003_32 | fill in the blank c7c4e707a042003_34 | fill in the blank c7c4e707a042003_35 | fill in the blank c7c4e707a042003_37 | fill in the blank c7c4e707a042003_39 | fill in the blank c7c4e707a042003_40 | |||||||||
2. How should the gain or loss on the sale of the asset be presented on the income statement?
The gain or loss should appear in the _________ of the income statement to indicate that it __________ part of the normal operating activity of the company.
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Managerial Accounting
Authors: Susan V. Crosson, Belverd E. Needles
8th Edition
9780618777174, 618777180, 618777172, 978-0618777181
