On January 2, 2018, Trendz Lighting purchased showroom fixtures for $20,000 cash, expecting the fixtures to remain
Question:
On January 2, 2018, Trendz Lighting purchased showroom fixtures for $20,000 cash, expecting the fixtures to remain in service for four years. Trendz Lighting has depreciated the fixtures on a straight-line basis, with zero residual value. On March 31, 2019, Trendz Lighting sold the fixtures for $12,000 cash. Record both the depreciation expense on the fixtures for 2019 and the sale of the fixtures on March 31, 2019. Round intermediate calculations to the nearest cent and final answers to the nearest whole dollar.
Step by Step Answer:
Journal DATE ACCOUNTS POST REF Dr Cr 2019 March 31 Depreciation Expense Fixtures 1250 Accumulated De...View the full answer
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
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