Question

Sheridan Company bought a machine on January 1, 2017. The machine cost $136000 and had an expected salvage value of $30000. The life of the machine was estimated to be 5 years. The depreciation expense using the straight-line method of depreciation is

$35333.

$27200.

$21200.

none of these answer choices are correct.

Equipment that cost $110000 and on which $57000 of accumulated depreciation has been recorded was disposed of for $60500 cash. The entry to record this event would include a

credit to Accumulated Depreciation for $11500.

gain of $7500.

credit to the Equipment account for $11500.

loss of $7500.

Answer 1

1.

Cost of Machine	$   136,000
Less: Salvage value	$   (30,000)
Depreciable value	$   106,000
Life of the Machine	5 Years
Depreciation per year ($106,000/5)	$     21,200

Answer is C. 21,200

2. Journal entry will be:

Debit Cash	$   60,500
Debit Accumulated depreciation	$   57,000
Credit Equipment		$   110,000
Credit gain on sales		$       7,500

Answer is B. Gain of $7,500

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