Question

shown below are the t-accounts relating to equipment that was purchased for cash by a company on the first day of the current year. The equipment was depreciated on a straight-line basis with an estimated useful life of 10 years and a salvage value of $90. Part of the equipment was sold on the last day of the current year for cash proceeds.

Cash Jan. 1 (a) 446 Dec. 31 Equipment Jan. 1 1,150 Dec. 31 426 Accumulated Depreciation-Equipment Dec. 31 106 40 Dec. 31 61 Dec. 31 Depreciation Expense (ь) Dec. 31 Gain on Disposal of Plant Assets (c) Dec. 31

Answer 1

Answer with working is given below

Date Journal Credit Debit $1,150 Jan-01 Equipment To Cash $1,150 Working note Cash Paid $1,150 Dec-31 Equipment sold $1,150 Dec-31 | closing balance Cash Account $704 Jan-01 Equipment purchase $446 $1,150 Sasol $1,150 Debit Credit Date Journal Dec-31 Depreciation Account To Accumulated Depreciation $106 $106 Depreciation expense Dec 31st $106 Working note Date Journal Credit Debit $40 $704 01-Jan 31-Dec Profit on sale Dec-31 Accumulated Depreciation Cash To Profit on Sale of Machine To Equipment Account Equipment Account $1,150 31-Dec Accumulated Dep $20 31-Dec Cash 31-Dec Closing balance $1,170 $40 $704 $426 $1,170 $724 Gain on disposal of Plant Assets 31-Dec $20