Exercise 11-35 Retirement and replacement depreciation [Appendix B]

Cadillac Construction Company uses the retirement method to determine depreciation on its small tools. During 2011, the first year of the company's operations, tools were purchased at a cost of $8,000. In 2013, tools originally costing $2,000 were sold for $250 and replaced with new tools costing $2,500.

Required:

1.

Prepare journal entries to record each of the above transactions. (If no entry is required for a transaction, select "No journal entry required" in the first account field.)

• Record the acquisition of small tools.
• Record additional small tool acquisitions.
• Record the sale/depreciation of small tools.

2.	Prepare journal entries to record each of the above transactions, assuming that the company uses the replacement depreciation method instead of the retirement method. (If no entry is required for a transaction, select "No journal entry required" in the first account field.)
	Record the acquisition of small tools. Record the replacement/depreciation of small tools. Record the sale of small tools.