Question

Entries for Sale of Fixed Asset Equipment acquired on January 8 at a cost of $111,750, has an estimated useful life of 14 years, has an estimated residual value of $9,550, and is depreciated by the straight- line method. a. What was the book value of the equipment at December 31 the end of the fourth year? b. Assuming that the equipment was sold on April 1 of the fifth year for 75,510. 1. Journalize the entry to record depreciation for the three months until the sale date. Round your answers to the nerest whole dollar if required. 2. Journalize the entry to record the sale of the equipment. If an amount box does not require an entry, leave it blank. Do not round intermediate calculations

Answer 1

Solution a:

Annual depreciation on equipment = (Cost - residual value) / useful life = ($111,750 - $9,550) / 14 = $7,300

Book value of equipment at the end of year 4 = $111,750 - ($7,300*4) = $82,550

Solution b:

Journal Entries
Event	Date	Particulars	Debit	Credit
1	1-Apr	Depreciation expense Dr	$1,825.00
		To Accumulated depreciation - equipment		$1,825.00
		(To record partial year depreciation_
2	1-Apr	Cash Dr	$75,510.00
		Accumulated depreciation - Equipment Dr	$31,025.00
		Loss on sale of equipment Dr	$5,215.00
		To equipment		$111,750.00
		(To record sale of equipment)