122) Prepare journal entries for the following independent transactions.
a.Erratic Corp. traded in several old computers for two new computers at the beginning of April. After updating depreciation prior to the trade-in, the Accumulated Depreciation account had a balance of $5,300 and the original cost of the computers was $10,900. In addition, Erratic Corp. paid $5,000 to acquire the new computers.
b.Terrain Corporation sold office equipment for $10,000 cash. The original cost of the equipment was $15,000; accumulated depreciation up to the date of sale had a balance of $6,900.
c.Glacial Limited disposed of fully amortized office furniture. The office furniture had a cost of $10,200 and no residual value.
123) On January 1, 2009, Kamloops Corporation purchased equipment for $15,500. Kamloops Corporation expected the equipment to remain in service for 4 years and have a residual value of $1,500. Kamloops Corporation amortized the equipment using double-declining-balance depreciation. On June 30, 2011, Kamloops Corporation sold the equipment for $3,750 cash.
Prepare journal entries on June 30, 2011, to record depreciation expense for the six months ended June 30, 2011, and to sell the equipment.
124) Most companies use straight-line depreciation for their books but an accelerated method (CCA depreciation) for the tax return. Explain why companies use these two different methods that result in the need for two sets of records.