Question

On January 1, 2020, the Accumulated Depreciation—Machinery account of Astros Company showed a balance of $370,000....

On January 1, 2020, the Accumulated Depreciation—Machinery account of Astros Company showed a balance of $370,000. At the end of 2020, after the adjusting entries were posted, it showed a balance of $395,000. During 2020, one of the machines which cost $125,000 was sold for $60,500 cash. This resulted in a loss of $4,000. Assuming that no other assets were disposed of during the year, how much was depreciation expense for 2020?

Homework Answers

Answer #1

Gain(loss) on sale of asset=sale price-(original cost-accumulated depreciation on machine)

-4000=60500-(125000-accumulated depreciation in machine)

-4000-60500=-125000+accumulated depreciation

-64500=-125000+accumulated depreciation

Accumulated depreciation=60500

Now;

Accumulated depreciation at the beginning of the year+depreciation expense of the year-accumulated depreciation on assets sold during the year=closing balance of accumulated depreciation

Thus,

370000+depreciation expense-60500=395000

Depreciation expense=395000+60500-370000

depreciation expense=$85,500

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