Question

Equipment acquired on January 8 at a cost of $150,000, has an estimated useful life of 20 years, has an estimated residual value of $8,600, 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 114,762.

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

Question - a 1 2 Equipment 3 Purchased on 4 Estimated life 5 Residual value $ 150,000 8-Jan 20 8,600 as on December 31 - first year 8 Depreciation Expense 9 Book Value $7,070 $ 142,930 10 as on December 31 - second year 11 12 Depreciation Expense $7,070 $ 135,860 13 Book Value 14 as on December 31 - third year 15 16 Depreciation Expense 17 Book Value $7,070 $ 128,790 18 as on December 31 - fourth year 19 20 Depreciation Expense 21 Book Value $7,070 $ 121,720 22 as on march 31 - first year 23 24 Depreciation Expense 25 Book Value 26 Less: Sale value 27 Loss on sale of equipment $1,768 $ 119,953 $ 114,762 5,191 28 B.

Н Journal Entries Debit ($) Credit ($) Date Account Titles 5th year 3 1-Apr Depreciation Expense $ 1,768 Accumulated Depreciation |(To record the depreciation expense) 1,768 1-Apr Cash $114,762 $ 30,048 $ 5,191 Accumulated Depreciation Loss on Sale of Equipment Equipment |(To record the equipment sold) $ 150,000 10 11 12 2.

A B Question - a 2 Equipment 3 Purchased on 150000 43838 4 Estimated life 5 Residual value 20 8600 as on December 31 - first year =SLN($B$2,$B$5,$B$4) =B2-B8 8 Depreciation Expense 9 Book Value 10 as on December 31 - second year 11 12 Depreciation Expense 13 Book Value =SLN($B$2,$B$5,$B$4) =B9-B12 14 as on December 31 - third year 15 16 Depreciation Expense 17 Book Value =SLN($B$2,$B$5,$B$4) =B13-B16 18 as on December 31 - fourth year 19 20 Depreciation Expense 21 Book Value =SLN($B$2,$B$5,$B$4) =B17-B20 22 as on march 31 - first year 23 |=(SLN($B$2,$B$5,$B$4))*(3/12) =B21-B24 24 Depreciation Expense 25 Book Value 26 Less: Sale value 27 Loss on sale of equipment 114762 =B25-B26 28

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