On January 1, 2018, World Inc. purchased five machines at a cost of $14,000 each. The company adopted the group (straight-line) depreciation method, using an eight-year life with a $2,800 salvage value per machine. Correct depreciation was recorded in 2016 and 2017. On January 1, 2020, one of the machines was sold for $6,500. On January 3, 2020, a new unrelated piece of equipment was purchased for $15,000 with no salvage value and a six-year life. It will be depreciated using the straight-line method.

Required:

Prepare appropriate journal entries for

a.	January 1, 2020
b.	December 31, 2020, to record depreciation expense

CHART OF ACCOUNTS

World Inc.

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
180	Machines
198	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
221	Notes Payable
224	Interest Payable
231	Salaries Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
531	Depreciation Expense
532	Bad Debt Expense
559	Miscellaneous Expense

Prepare appropriate journal entries for

a.	January 1, 2020
b.	December 31, 2020, to record depreciation expense

General Journal Instructions

PAGE 10

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5