On January 1, 20X1, the Dallas Auto Parts Company acquired nine identical assembly robots for a total of $594,000 cash. The robots had an expected useful life of 10 years and an expected residual value of $54,000 in total. Dallas uses straight-line depreciation. 1. Set up T-accounts and prepare the journal entries for the acquisition and for the first annual depreciation charge. Post to T-accounts.
B. On December 31, 20X3, Dallas sold one of the robots for $40,000 in cash. The robot had an original cost of $66,000 and an expected residual value of $6,000. Prepare the journal entry for the sale. Refer to requirement
2. Suppose Dallas had sold the robot for $62,000 cash instead of $40.000. Prepare the journal entry for the sale.

Dallas Auto Parts Company

1. T-accounts and journal entries for the acquisition and first annual depreciation charge:

Journal Entries:

Jan. 1, 20X1:

Debit Assembly Robots (Equipment) $594,000

Credit Cash $594,000

To record the acquisition of nine identical robots.

Dec. 31, 20x1:

Debit Depreciation Expense $54,000

Credit Accumulated Depreciation $54,000

To record the depreciation expense for the first year.

Assembly Robots (Equipment)

Date             Account Titles         Debit       Credit

Jan. 1, 20X1  Cash                $594,000

Cash

Date             Account Titles         Debit       Credit

Jan. 1, 20X1 Assembly Robots (Equipment) $594,000

Depreciation Expense

Date               Account Titles         Debit       Credit

Dec. 31, 20X1 Accumulated Depr. $54,000

Accumulated Depreciation - Equipment

Date               Account Titles         Debit       Credit

Dec. 31, 20X1 Depreciation Expense        $54,000

B. Journal Entries for the sale of one robot for $40,000 cash.

December 31, 20X1:

Debit Cash $40,000

Credit Sale of Equipment $40,000

To record the sale of one robot for cash.

Debit Accumulated Depreciation $18,000

Credit Sale of Equipment $18,000

To transfer the accumulated depreciation to the sale of equipment account.

Debit Sale of Equipment $66,000

Credit Equipment $66,000

To transfer the equipment account to the sale of equipment.

Debit Loss from Sale of Equipment $8,000

Credit Sale of Equipment $8,000

To record the loss from sale of equipment.

2. Journal Entries for the sale of the robot for $62,000 cash:

December 31, 20X1:

Debit Cash $62,000

Credit Sale of Equipment $62,000

To record the cash receipts from sale of equipment.

Debit Accumulated Depreciation $18,000

Credit Sale of Equipment $18,000

To transfer the accumulated depreciation to the sale of equipment.

Debit Sale of Equipment $66,000

Credit Equipment $66,000

To transfer the equipment account to the sale of equipment.

Debit Sale of Equipment $14,000

Credit Gain from sale of Equipment $14,000

To record the gain from the sale of equipment.

Explanation:

a) Data and Calculations:

Cost of nine assembly robots = $594,000

Unit cost of a robot = $66,000 ($594,000/9)

Expected useful life = 10 years

Expected residual value = $54,000

Unit residual value = $6,000 ($54,000/9)

Depreciable amount for each robot = $60,000 ($66,000 - $6,000)

Straight-line annual depreciation expense = $6,000 ($60,000/10)

Sale of one robot for $40,000 cash:

Accumulated depreciation for one robot on December 31, 20x3 = $18,000

Net book value = $48,000 ($66,000 - $18,000)

Cash $40,000 Sale of Equipment $40,000

Accumulated Depreciation $18,000 Sale of Equipment $18,000

Sale of Equipment $66,000 Equipment $66,000

Loss from Sale of Equipment $8,000 Sale of Equipment $8,000

Sale of one robot for $62,000

Accumulated depreciation for one robot on December 31, 20x3 = $18,000

Net book value = $48,000 ($66,000 - $18,000)

Cash $62,000 Sale of Equipment $62,000

Accumulated Depreciation $18,000 Sale of Equipment $18,000

Sale of Equipment $66,000 Equipment $66,000

Sale of Equipment $14,000 Gain from sale of Equipment $14,000

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explanation:

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