Question

Need help! Gains and loses

GAINS and LOSSES There are 5 problems in this et. Choose a number from 1 to 5 TOTAL SCORE: 2 /9 Logan purchased a machine on 01/01/17 Use the following data in your calculations: COST SALVAGE VALUE$3.000 LIFE DEPRECIATION METHOD: SL 15,000 5 YEARS What is the depreciation amount per year? What is the Accumulated Depreciation after 3 years? What is the book value of the asset at the end of year 3? The machine was sold at the end of 3 years for cash of S8,300 What is the amount of the GAIN or LOSS? (Show loss as negative) Did the company ma ke a gain or a loss? JOURNAL CASH ACC. DEPR.EQUIPMENT GAIN ON DISPOSAL MACHINE DEBIT CREDIT A journal entry will be automatically generated based on your responses above. 8.300 15,000 Out of Balan.

Answer 1

Answer to question 1

Depreciation per Year = $ 2,400

Straight line Method
A	Cost	$     15,000.00
B	Residual Value	$        3,000.00
C=A - B	Depreciable base	$     12,000.00
D	Life [ in years]	5
E=C/D	Annual SLM depreciation	$        2,400.00

Answer to question 2

Accumulated depreciation after year 3 = $7,200

Year	Book Value	Depreciation expense	Ending Book Value	Accumulated Depreciation
1	$    15,000.00	$     2,400.00	$ 12,600.00	$    2,400.00
2	$    12,600.00	$     2,400.00	$ 10,200.00	$    4,800.00
3	$    10,200.00	$     2,400.00	$    7,800.00	$    7,200.00

.

Answer to question 3

Book value of asset at the end of year = $ 7,800

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Answer to question 4                   

There will be gain of $500 on sale at the end of year 3

Computation on sale of Asset
Cost	$ 15,000.00
Accumulated depreciation	$    7,200.00
Book value	$    7,800.00
Sales price	$    8,300.00
Book value	$    7,800.00
Gain /(loss)	$       500.00

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Answer to Question 5

Journal entry at the time of sale

General Journal	Debit	Credit
Cash	$        8,300.00
Acc Dep-Equipment	$        7,200.00
Gain on Disposal		$             500.00
Machine		$       15,000.00
(Machine sold)