CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 18-1 Buying Plant Assets and Paying Property Tax

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 17-2 Writing Off and Collecting Uncollectible Accounts Receivable

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 18-1 JOURNALIZING WRITING OFF AN UNCOLLECTIBLE ACCOUNT RECEIVABLE 1 page 519 January 4. Wrote off Metro Food Court’s past-due account as uncollectible, $1, Memorandum No Debit 2.Credit and customer’s name 22

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON Post the credit amount to general ledger. POSTING AN ENTRY TO WRITE OFF AN UNCOLLECTIBLE ACCOUNT RECEIVABLE 4 page Post the debit amount to general ledger. 3.Post the credit amount to customer account. 4.Write Written off in the customer account.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 18-1 REOPENING AN ACCOUNT PREVIOUSLY WRITTEN OFF 1.Enter a debit to Accounts Receivable. Place a diagonal line in the Post. Ref. column. 2 page 521 January 30. Received cash in full payment of Metro Food Court’s account, previously written off as uncollectible, $1, Memorandum No. 5 and Receipt No Enter a credit to Allowance for Uncollectible Accounts. 1 1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 18-1 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, Memorandum No. 5 and Receipt No. 12.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON Write the words Reopen account in the Item column of the customer account. POSTING ENTRIES FOR COLLECTING A WRITTEN-OFF ACCOUNT RECEIVABLE page Post the general journal entry to the general ledger. 2.Post the debit portion of the general journal entry to the customer account. 4.Post the cash receipts journal entry to the customer account.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 18-1 TERM REVIEW writing off an account page 524

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 18-1 RECORDING THE BUYING OF A PLANT ASSET 12 3 page 535 January 3, 20X1. Paid cash for a display case, $3, Check No Cash paid 4 2.Cost of the plant asset 1.Account title 4.Post

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 18-1 CALCULATING AND PAYING PROPERTY TAX page 536 February 1. Classic Parts, Inc., paid cash for property tax, $ Check No. 69. Annual Property Tax =Tax Rate× Assessed Value $720.00=1.2%×$60,000.00

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON 18-1 TERMS REVIEW real property personal property assessed value page 537

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 18-3 Journalizing Depreciation Expense

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 13 LESSON 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. PREPARING PLANT ASSET RECORDS page Do not write in Section 2 until the asset is disposed of. 1.Write the information in Section 1 when the asset is purchased.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 14 LESSON 18-1 JOURNALIZING ANNUAL DEPRECIATION EXPENSE page Record adjusting entry 2. Accumulated Depreciation credit 1. Depreciation Expense debit

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 15 LESSON 18-1 POSTING AN ADJUSTING ENTRY FOR DEPRECIATION EXPENSE 1.Debit Depreciation Expense. page Credit Accumulated Depreciation. 1 2

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 16 LESSON 18-1 TERM REVIEW plant asset record page 545

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 18-4 Disposing of Plant Assets

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 18 LESSON 18-1 SALE OF A PLANT ASSET FOR BOOK VALUE 1.Record an entry in the cash receipts journal to remove the original cost. 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, Receipt No Check the type of disposal, and write the date, and disposal amount in Section 2 of the plant asset record. 1 2

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 19 LESSON 18-1 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, $ Memorandum No Debit the depreciation expense account. 2.Credit the accumulated depreciation account. 3.Update Section 3 of the plant asset record

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 20 LESSON 18-1 SALE OF A PLANT ASSET FOR MORE THAN BOOK VALUE 1.Remove the original cost. Record the gain on the sale. Record the cash received from the sale. 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, Receipt No Check the type of disposal. Write the date and disposal amount in Section 2 of the plant asset record. 1 2

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 21 LESSON Remove the original cost. Record the loss on the sale. Record the cash received from the sale. SALE OF A PLANT ASSET FOR LESS THAN BOOK VALUE 1 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, Receipt No Check the type of disposal and write the date and disposal amount in Section 2. 2

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 22 LESSON 18-1 TERMS REVIEW gain on plant assets loss on plant assets page 550

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 18-5 Declining-Balance Method of Depreciation

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 24 LESSON 18-1 CALCULATING DEPRECIATION USING THE DOUBLE DECLINING-BALANCE METHOD 1 23 page 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.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 25 LESSON 18-1 CALCULATING THE LAST YEAR’S DEPRECIATION EXPENSE 23 page 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. 1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 26 LESSON 18-1 COMPARISON OF TWO METHODS OF DEPRECIATION page 553

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 27 LESSON 18-1 TERM REVIEW declining-balance method of depreciation page 554