Fixed assets: journal entry worksheet
Name: Date:
Convention: United States (US textbooks)
Record each transaction as a journal entry: write each account in the Debit or the Credit column with its amount.
Buying equipment for cash
A company buys a production machine for $18,000.00 and pays the full price by check on delivery.
Assumptions: No sales tax applies to this purchase.
Accounts to choose from: Equipment · Depreciation Expense · Inventory · Accounts Payable · Cash · Repairs Expense
Account Debit Credit Buying a computer server on account
A company buys a computer server for its office on account for $4,800.00. The supplier’s invoice is payable in 60 days.
Assumptions: No sales tax applies to this purchase. The company records computers in its Equipment account.
Accounts to choose from: Inventory · Equipment · Cash · Accounts Payable · Notes Payable · Repairs Expense
Account Debit Credit Buying equipment with a down payment and a note payable
A company buys a machine for $24,000.00. On delivery it pays $6,000.00 by check as a down payment and signs a 6-month, 6% note payable to the supplier for the balance.
Assumptions: No sales tax applies to this purchase. Interest on the note is recorded as it accrues, not at purchase.
Accounts to choose from: Cash · Equipment · Notes Payable · Repairs Expense · Accounts Payable · Mortgage Payable · Interest Expense
Account Debit Credit Buying equipment including freight and installation
A company buys a machine for $20,000.00. A carrier charges $600.00 to bring it to the factory, and a technician charges $900.00 to install and test it. All three amounts are paid by check the day the machine is ready for use.
Assumptions: No sales tax applies to these amounts.
Accounts to choose from: Inventory · Equipment · Cash · Vehicles · Accounts Payable · Repairs Expense
Account Debit Credit Buying equipment with sales tax, part paid and part on account
A company buys a machine for $10,000.00 plus 6% sales tax. It pays $4,000.00 by check; the rest is owed to the supplier on account, due in three months.
Assumptions: Sales tax 6%.
Accounts to choose from: Accounts Payable · Notes Payable · Vehicles · Repairs Expense · Sales Tax Payable · Equipment · Cash
Account Debit Credit Buying a plot of land
A company buys a plot of undeveloped land next to its warehouse, to use as a storage yard. It pays the price of $80,000.00 and closing costs of $1,600.00 (title insurance and recording fees) by check.
Assumptions: The seller pays the real estate commission.
Accounts to choose from: Cash · Depreciation Expense · Notes Payable · Buildings · Land · Accounts Payable
Account Debit Credit Buying a building with a mortgage loan and a bank transfer
A company buys a warehouse for $400,000.00; an appraisal assigns $100,000.00 of the price to the land it stands on. A bank grants a 20-year mortgage loan of $280,000.00, repayable in monthly installments, and pays it directly to the seller. The company pays the rest by check.
Assumptions: Closing costs and loan fees are ignored. The whole mortgage is recorded in one account; its current portion is shown separately only on the balance sheet.
Accounts to choose from: Land · Accounts Payable · Buildings · Equipment · Mortgage Payable · Interest Expense · Cash
Account Debit Credit Buying a delivery van with a bank loan
A company buys a delivery van for $32,000.00. It signs a three-year note payable with its bank for $25,000.00, with the whole principal due at maturity; the bank pays the loan directly to the dealer. The company pays the rest by check.
Assumptions: Sales tax and registration fees are ignored. Interest is paid monthly and recorded when due, not at purchase.
Accounts to choose from: Interest Expense · Accounts Payable · Cash · Vehicles · Notes Payable · Interest Payable · Mortgage Payable
Account Debit Credit Annual straight-line depreciation of a delivery van
On January 1 two years ago, a company bought a delivery van for $25,500.00. Its useful life is 5 years and its salvage value is $3,000.00. Record this year's depreciation on December 31.
Assumptions: Depreciation is accumulated in Accumulated Depreciation. Straight-line depreciation: the cost minus the salvage value is spread evenly over the useful life.
Accounts to choose from: Vehicles · Repairs Expense · Cash · Depreciation Expense · Accumulated Depreciation—Vehicles · Loss on Disposal of Equipment
Account Debit Credit Depreciation of a building for part of its first year
This year a company bought an office building. Its cost, without the land, is $240,000.00. It was placed in service on the first day of a month, and by December 31, the year end, it has been used for 9 months. Useful life 25 years, no salvage value. Record this year's depreciation.
Assumptions: Depreciation is accumulated in Accumulated Depreciation. Straight-line depreciation, counted in whole months from the month the building was placed in service.
Accounts to choose from: Buildings · Repairs Expense · Depreciation Expense · Accumulated Depreciation—Buildings · Land · Cash
Account Debit Credit Declining-balance depreciation, first year
On January 1 a company bought a new machine for $30,000.00 and placed it in service the same day. Its useful life is 5 years, with no salvage value. Record the first year's depreciation on December 31.
Assumptions: Depreciation is accumulated in Accumulated Depreciation. Double-declining-balance method: twice the straight-line rate, applied to the book value at the start of each year. A full year of depreciation.
Accounts to choose from: Equipment · Accumulated Depreciation—Equipment · Cash · Depreciation Expense · Loss on Disposal of Equipment · Repairs Expense
Account Debit Credit Depreciating several assets in one entry
On December 31 a company records the year's depreciation on three assets in one entry: an office building (cost without the land $240,000.00, useful life 40 years), a machine (cost $24,000.00, 8 years) and a delivery van (cost $20,000.00, 5 years). None has a salvage value.
Assumptions: Depreciation is accumulated in Accumulated Depreciation. Straight-line depreciation; the company owned all three assets for the whole year. Each asset class has its own accumulated depreciation account.
Accounts to choose from: Vehicles · Equipment · Accumulated Depreciation—Buildings · Buildings · Cash · Accumulated Depreciation—Vehicles · Accumulated Depreciation—Equipment · Depreciation Expense
Account Debit Credit Selling a machine on account at a gain
A company sells a used machine on account for $9,000.00; the buyer will pay in 30 days. The machine cost $18,000.00 and its accumulated depreciation is $12,000.00.
Assumptions: Depreciation is accumulated in Accumulated Depreciation. Depreciation has been recorded up to the date of sale. Sales tax is ignored in this item.
Accounts to choose from: Depreciation Expense · Loss on Disposal of Equipment · Accounts Receivable · Equipment · Gain on Disposal of Equipment · Cash · Sales Revenue · Accumulated Depreciation—Equipment
Account Debit Credit Selling a machine at a loss
A company sells a used machine for $3,000.00 cash. The machine cost $12,000.00 and its accumulated depreciation is $7,000.00.
Assumptions: Depreciation is accumulated in Accumulated Depreciation. Depreciation has been recorded up to the date of sale. Sales tax is ignored in this item.
Accounts to choose from: Sales Revenue · Equipment · Accounts Receivable · Loss on Disposal of Equipment · Accumulated Depreciation—Equipment · Depreciation Expense · Cash · Gain on Disposal of Equipment
Account Debit Credit Scrapping a fully depreciated machine
A machine that cost $8,500.00 is fully depreciated; it had no salvage value. It no longer works, so today the company scraps it: it is hauled away free of charge and nothing is received for it.
Assumptions: Depreciation is accumulated in Accumulated Depreciation. No disposal costs and no proceeds.
Accounts to choose from: Accumulated Depreciation—Equipment · Depreciation Expense · Loss on Disposal of Equipment · Gain on Disposal of Equipment · Cash · Equipment
Account Debit Credit Trading in an old delivery van for a new one
A company trades in its old delivery van for a new one with a price of $39,000.00. The dealer gives a trade-in allowance of $10,500.00 for the old van, and the company pays the rest in cash. The old van cost $28,000.00 and its accumulated depreciation is $20,000.00.
Assumptions: Depreciation is accumulated in Accumulated Depreciation. The trade-in allowance equals the old van's fair value and the exchange has commercial substance, so the new van is recorded at the cash paid plus that fair value and the gain on the old van is recognized. Depreciation has been recorded up to the date of the trade-in. Sales tax is ignored in this item.
Accounts to choose from: Depreciation Expense · Accumulated Depreciation—Vehicles · Repairs Expense · Cash · Vehicles · Notes Payable · Accounts Payable · Gain on Disposal of Vehicles
Account Debit Credit Paying for an ordinary repair
A production machine breaks down. A technician replaces a worn drive belt and adjusts the machine, and the company pays the bill of $480.00 in cash the same day.
Assumptions: The repair only restores the machine to its normal working condition: it does not increase its capacity or extend its useful life. No sales tax applies.
Accounts to choose from: Accumulated Depreciation—Equipment · Depreciation Expense · Cash · Equipment · Accounts Payable · Repairs Expense
Account Debit Credit Adding a refrigeration unit to a van, on account
A company has a refrigeration unit fitted to its delivery van so that the van can carry chilled goods. The supplier’s bill is $8,500.00, payable in 60 days.
Assumptions: The unit stays on the van for the rest of its life and adds a capability the van did not have; no existing part is replaced. No sales tax applies.
Accounts to choose from: Depreciation Expense · Cash · Repairs Expense · Notes Payable · Vehicles · Accounts Payable
Account Debit Credit Owner contributes a private machine to the business during the year
In the middle of the year, the owner of a sole proprietorship transfers to the business a machine that she has owned privately for five years. An independent appraisal values it at $9,500.00 today. The business will use the machine in its workshop.
Assumptions: The machine is recorded at its fair value (the appraised value) on the day of the transfer. No sales tax applies.
Accounts to choose from: Notes Payable · Accounts Payable · Owner’s Capital · Owner’s Drawings · Cash · Service Revenue · Equipment
Account Debit Credit
Not in this convention: Selling a machine at a gain, with VAT
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