Answer to Question #101144 in Accounting for linda

Question

Walker Co. purchased furniture on February 4, 2012, for $70,000 on account. At that time it was expected to have a useful life of five years and a $1,000 residual value. The furniture was disposed of on January 26, 2015, when the company moved to new premises. Walker Co. uses the diminishing-balance method of depreciation with a 20% rate and calculates depreciation for partial periods to the nearest month. The company has a September 30 year end
a) Record the acquisition of the furniture on February 4, 2012
b) Record depreciation for each of 2012, 2013, and 2014
c) Record the disposal on January 26 2015 under the following assumptions:
1. It was scrapped and has no residual value
2. It was sold for $30,000
3. It was sold for $40,000
4. It was traded for new furniture with a catalogue price of $115,000. Walker Co. was given a trade-in allowance of $45,000 on the old furniture and paid the balance in cash. Walker Co. determined that the old furniture’s fair value was $30,000 at the date of the exchange

Answer 1

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