60.1K

Verified Solution

Link Copied!

image

Jijang Excavations Ltd. (JEL) operates specialized equipment for installing natural gas pipelines. JEL, which has a December 31 year end, began 2020 with a single piece of equipment that had been purchased on January 1, 2017 for $ 45,000 and a truck that had been purchased on January 1, 2019. for $ 70,000. When the equipment was purchased JEL's management had estimated that the equipment would have a residual value of $3,000 and a useful life of six years. When the truck was purchased, management determined that it would have a useful life of four years and a residual value of $ 3,000. On March 31, 2020, JEL sold this piece of equipment for $ 27.250 cash. On April 1, 2020, JEL purchased replacement equipment with double the capacity for $71,200 cash. JEL's management determined that this equipment would have a useful life of six years and a residual value of $ 10,000 Prepare all necessary journal entries for the year ended December 31, 2020. Assume that JEL uses the straight-line depreciation method for its equipment and the double-diminishing-balance method for its trucks. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Mar 31 Depreciation Expense Accumulated Depreciation Equipment Mar. 31 Cash Accumulated Depreciation - Equipment Equipment Gain on Disposal I (To record sale of equipment) Apr1 Equipment Cash Dec. 31 Depreciation Expense Accumulated Depreciation - Equipment (To record depreciation expense on equipment) Dec. 31 Depreciation Expense Accumulated Depreciation. Trucks (To record depreciation expense on truck)

Answer & Explanation Solved by verified expert

See Answer