Homework Answers
b.
Depreciation rate = 2x1/useful life
= 2 x 1/10
= 20%
Depreciation for year 1 = Cost price x Depreciation rate
= 29,000 x 20%
= $5,800
Book value after year 1 = Cost price - Depreciation for year 1
= 29,000-5,800
= $23,200
Depreciation expense for year 2 = 23,200 x 20%
= $4,640
Book value of equipment after year 2 = Book value after year 1 - Depreciation expense for year 2
= 23,200-4,640
= $18,560
Sale price of equipment = $6,700
Loss on sale of equipment = Book value of equipment after year 2 - Sale price of equipment
= 18,560-6,700
= $11,860
c.
| General Journal | Debit | Credit |
| Cash | $6,700 | |
| Loss on sale of equipment | $11,860 | |
| Accumulated depreciation- equipment | $10,440 | |
| Equipment | $29,000 |
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