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Accounting 3

Accounting 3. Chapter 21 Section 3. Preparing Plant Asset Records. A separate record is kept for each plant asset. This is called a Plant Asset Record . Section 1 is prepared when the asset is purchased. It includes, the description, account numbers, serial numbers, cost, etc.

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Accounting 3

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  1. Accounting 3 Chapter 21 Section 3

  2. Preparing Plant Asset Records • A separate record is kept for each plant asset. This is called a Plant Asset Record. • Section 1 is prepared when the asset is purchased. It includes, the description, account numbers, serial numbers, cost, etc. • Section 2 provides space for recording the disposal information of the asset when it is taken out of use. • Section 3 provides space for recording annual depreciation expense and the changing book value each year it is used.

  3. Plant Asset Record No : ________ General Ledger Account No: __________ Description: ________________________ General Ledger Account: ___________________ Date Bought: _____________ Serial Number: __________________ Original Cost: _____________ Est. Useful Life: __________ Est. Salvage Value: _________ Depreciation Method: ___________ Disposed of: Discarded _________ Sold __________ Traded __________ Date: _________________ Disposal Amount: ____________________ Year Annual Depreciation Expense Accumulated Depreciation Ending Book Value Plant Asset Record Example

  4. Journalizing Annual Depreciation Expense • At the end of the fiscal year, after each plant assets depreciation has been figured and recorded, the total depreciation expense for all plant assets in the same plant asset account is calculated. • In example, the depreciation expense of all plant assets in the store equipment account would need to be calculated.

  5. Journalizing Annual Depreciation Expense • To journalize the depreciation expense of a plant asset account, an adjusting entry must be made using two accounts in the General Journal. • First is Depreciation Expense- (type of plant asset). This account has a normal debit balance and increases with a debit. • Second is Accumulated Depreciation- (type of plant asset). This account is used to keep track of all accumulated depreciation for each type of plant asset. It has a normal credit balance (because it is a contra asset account) and increases with a credit.

  6. General Journal Page ___ Doc. No. Post Ref. Date Account Title Debit Credit Winning Edge determined that total depreciation expense for store equipment is $8,750.00. After the adjustment has been planned on the worksheet… 15 31 Depreciation Expense-Store Equip. 8 7 5 0 00 Acc. Depr.-Store Equipment 8 7 5 0 00 Posting for this transaction is done in the same way any other posting for General Debit and Credit would be done.

  7. Work Together p. 556 On next four slides Plant Asset Record No : ________ General Ledger Account No: __________ Description: ________________________ General Ledger Account: ___________________ Date Bought: _____________ Serial Number: __________________ Original Cost: _____________ Est. Useful Life: __________ Est. Salvage Value: _________ Depreciation Method: ___________ Disposed of: Discarded _________ Sold __________ Traded __________ Date: _________________ Disposal Amount: ____________________ Year Annual Depreciation Expense Accumulated Depreciation Ending Book Value 134 1215 Television Store Equipment January 4, 2001 15SG152 $700.00 3 years $100.00 Straight-Line 2001 $200.00 $200.00 $500.00 2002 $200.00 $400.00 $300.00 2003 $200.00 $600.00 $100.00

  8. Plant Asset Record No : ________ General Ledger Account No: __________ Description: ________________________ General Ledger Account: ___________________ Date Bought: _____________ Serial Number: __________________ Original Cost: _____________ Est. Useful Life: __________ Est. Salvage Value: _________ Depreciation Method: ___________ Disposed of: Discarded _________ Sold __________ Traded __________ Date: _________________ Disposal Amount: ____________________ Year Annual Depreciation Expense Accumulated Depreciation Ending Book Value 1205 135 Office Desk Office Equipment May 27, 2001 GE572N $920.00 6 years $200.00 Straight Line 2001 $70.00 $70.00 $850.00 2002 $120.00 $190.00 $730.00 2003 $120.00 $310.00 $610.00

  9. Worksheet Account Title Trial Balance Adjustments Debit Credit Debit Credit Gabriel, Inc. For Year Ended, December 31, 2003 Office Equipment 24 5 8 7 00 Accumulated Depreciation-Office Equipment 8 4 5 4 00 (f) 3 1 2 0 00 Depreciation Expense-Office Equipment (f) 3 1 2 0 00

  10. General Journal Page ___ Doc. No. Post Ref. Date Account Title Debit Credit 18 Adjusting Entries Dec 31 Depreciation Expense-Office Equip 6120 3 1 2 0 00 Acc. Depreciation-Office Equip 1210 3 1 2 0 00

  11. General Ledger Account Account Acct No. Acct No. Post Ref Post Ref Date Date Item Item Debit Debit Credit Credit BALANCE BALANCE DEBIT DEBIT CREDIT CREDIT Accumulated Depreciation-Office Equipment 1210 Jan 1 Balance 8 4 5 4 00 Dec 31 G18 3 1 2 0 00 11 5 7 4 00 Depreciation Expense-Office Equipment 6120 Dec 31 G18 3 1 2 0 00 3 1 2 0 00

  12. Assignment • Do Application 21-3 and 21-4 by hand. • Turn it into Mrs. Middleton. • Move on to Section 21-4.

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