LESSON 18-1

1. LESSON 18-1 Buying Plant Assets and Paying Property Tax

2. LESSON 17-2 Writing Off and Collecting Uncollectible Accounts Receivable

3. 2 2 JOURNALIZING WRITING OFF AN UNCOLLECTIBLE ACCOUNT RECEIVABLE page 519 January 4. Wrote off Metro Food Court’s past-due account as uncollectible, $1,621.00. Memorandum No. 3. 1 1. Debit 2. Credit and customer’s name LESSON 18-1

4. 2 3 1 POSTING AN ENTRY TO WRITE OFF AN UNCOLLECTIBLE ACCOUNT RECEIVABLE page 520 1. Post the debit amount to general ledger. 2. Post the credit amount to general ledger. 3. Post the credit amount to customer account. 4. Write Written off in the customer account. 4 LESSON 18-1

5. 1. Enter a debit to Accounts Receivable. Place a diagonal line in the Post. Ref. column. 1 1 REOPENING AN ACCOUNT PREVIOUSLY WRITTEN OFF page 521 January 30. Received cash in full payment of Metro Food Court’s account, previously written off as uncollectible, $1,621.00. Memorandum No. 5 and Receipt No. 12. 2 2. Enter a credit to Allowance for Uncollectible Accounts. LESSON 18-1

6. RECORDING CASH RECEIVED FOR AN ACCOUNT PREVIOUSLY WRITTEN OFF page 522 January 30. Received cash in full payment of Metro Food Court’s account, previously written off as uncollectible, $1,621.00. Memorandum No. 5 and Receipt No. 12. LESSON 18-1

7. 1 1 2 4 POSTING ENTRIES FOR COLLECTING A WRITTEN-OFF ACCOUNT RECEIVABLE page 523 1. Post the general journal entry to the general ledger. 2. Post the debit portion of the general journal entry to the customer account. 3. Write the words Reopen account in the Item column of the customer account. 4. Post the cash receipts journal entry to the customer account. 3 LESSON 17-2

8. TERM REVIEW page 524 • writing off an account LESSON 18-1

9. 4 RECORDING THE BUYING OF A PLANT ASSET page 535 January 3, 20X1. Paid cash for a display case, $3,250.00. Check No. 4. 1 2 3 1. Account title 3. Cash paid 2. Cost of the plant asset 4. Post LESSON 18-1

10. AssessedValue × Tax Rate = AnnualProperty Tax CALCULATING AND PAYING PROPERTY TAX page 536 February 1. Classic Parts, Inc., paid cash for property tax, $720.00. Check No. 69. $60,000.00 × 1.2% = $720.00 LESSON 18-1

11. TERMS REVIEW page 537 • real property • personal property • assessed value LESSON 18-1

12. LESSON 18-3 Journalizing Depreciation Expense

13. PREPARING PLANT ASSET RECORDS page 542 1 1. Write the information in Section 1 when the asset is purchased. 2 2. Do not write in Section 2 until the asset is disposed of. 3 3. Each year the asset is owned, record the year’s annual depreciation expense in Section 3. Calculate and record accumulated depreciation and ending book value. LESSON 18-1

14. 3 3 JOURNALIZING ANNUAL DEPRECIATION EXPENSE page 543 2 1 1. Depreciation Expense debit 2. Accumulated Depreciation credit 3. Record adjusting entry LESSON 18-1

15. 1. Debit Depreciation Expense. 1 2 POSTING AN ADJUSTING ENTRY FOR DEPRECIATION EXPENSE page 544 2. Credit Accumulated Depreciation. LESSON 18-1

16. TERM REVIEW page 545 • plant asset record LESSON 18-1

17. LESSON 18-4 Disposing of Plant Assets

18. 1. Record an entry in the cash receipts journal to remove the original cost. 2 SALE OF A PLANT ASSET FOR BOOK VALUE page 546 January 6, 20X6. Received cash from sale of display case, $250.00: original cost, $3,250.00; total accumulated depreciation through December 31, 20X5, $3,000.00. Receipt No. 4. 1 2. Check the type of disposal, and write the date, and disposal amount in Section 2 of the plant asset record. LESSON 18-1

19. 3 RECORDING A PLANT ASSET’S DEPRECIATION EXPENSE FOR A PARTIAL YEAR page 547 April 4, 20X7. Recorded a partial year’s depreciation on a safe to be sold, $60.00. Memorandum No. 31. 1 2 1. Debit the depreciation expense account. 2. Credit the accumulated depreciation account. 3. Update Section 3 of the plant asset record. LESSON 18-1

20. 1. Remove the original cost. Record the gain on the sale. Record the cash received from the sale. SALE OF A PLANT ASSET FOR MORE THAN BOOK VALUE page 548 April 4, 20X7. Received cash from sale of safe, $425.00: original cost, $1,800.00; accumulated depreciation through April 4, 20X7, $1,500.00. Receipt No. 47. 1 2 2. Check the type of disposal. Write the date and disposal amount in Section 2 of the plant asset record. LESSON 18-1

21. SALE OF A PLANT ASSET FOR LESS THAN BOOK VALUE page 549 October 6, 20X7. Received cash from sale of a computer, $150.00: original cost, $1,900.00; total accumulated depreciation through October 1, 20X7, $1,500.00. Receipt No. 281. 1 2 1. Remove the original cost. Record the loss on the sale. Record the cash received from the sale. 2. Check the type of disposal and write the date and disposal amount in Section 2. LESSON 18-1

22. TERMS REVIEW page 550 • gain on plant assets • loss on plant assets LESSON 18-1

23. LESSON 18-5 Declining-Balance Method of Depreciation

24. 4 CALCULATING DEPRECIATION USING THE DOUBLE DECLINING-BALANCE METHOD page 551 1 2 3 1. Calculate the double declining-balance rate. 2. Determine the annual depreciation expense. 3. Determine the ending book value. 4. Transfer the ending book value to the beginning book value for the following year. LESSON 18-1

25. 1 CALCULATING THE LAST YEAR’S DEPRECIATION EXPENSE page 552 2 3 1. Transfer the ending book value from Year 4 to the beginning book value of Year 5. 2. Subtract the salvage value from the beginning book value to determine the depreciation expense for the last year. 3. Verify that the ending book value is equal to the salvage value. LESSON 18-1

26. COMPARISON OF TWO METHODS OF DEPRECIATION page 553 LESSON 18-1

27. TERM REVIEW page 554 • declining-balance method of depreciation LESSON 18-1