Question

Sale of Equipment

Equipment was acquired at the beginning of the year at a cost of $637,500. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $40,500.

a. What was the depreciation for the first year? Round your answer to the nearest cent.
$ 66.333.33

b. Using the rounded amount from Part a in your computation, determine the gain(loss) on the sale of the equipment, assuming it was sold at the end of year eight for

Round your answer to the nearest cent and enter as a positive amount.
$ __??___ Loss

c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Round your answers to the nearest cent.

Cash    99,843

Accumulated Deprecation Equipment ???

Loss on Sale of Equipment ???

Equipment 637500

Answer 1

Sale price is taken from part C, If sale price is something else please let me know in comment below.

Question B

Answer-----------$6990.33 Loss

Question C

Answer-----------Journal Entry

General Journal	Debit	Credit
Cash	$            99,843.00
Accumulated Depreciation-Equipment	$        5,30,666.67
Loss on sale of Equipment	$              6,990.33
Equipment		$    6,37,500.00

Working

Cost	$     6,37,500.00
Accumulated depreciation	$     5,30,666.67
Book value	$     1,06,833.33
Sales price	$         99,843.00
Book value	$     1,06,833.33
Gain /(loss)	$         (6,990.33)

.

Straight line Method
A	Cost	$ 637,500
B	Residual Value	$ 40,500
C=A - B	Depreciable base	$ 597,000
D	Life [in years left ]	9
E=C/D	Annual SLM depreciation	$             66,333.33

.

Depreciation schedule-Straight line method
Year	Book Value	Depreciation expense	Accumulated Depreciation	Ending Book Value
1	$      6,37,500.00	$             66,333.33	$             66,333.33	$           5,71,166.67
2	$      5,71,166.67	$             66,333.33	$          1,32,666.67	$           5,04,833.33
3	$      5,04,833.33	$             66,333.33	$          1,99,000.00	$           4,38,500.00
4	$      4,38,500.00	$             66,333.33	$          2,65,333.33	$           3,72,166.67
5	$      3,72,166.67	$             66,333.33	$          3,31,666.67	$           3,05,833.33
6	$      3,05,833.33	$             66,333.33	$          3,98,000.00	$           2,39,500.00
7	$      2,39,500.00	$             66,333.33	$          4,64,333.33	$           1,73,166.67
8	$      1,73,166.67	$             66,333.33	$          5,30,666.67	$           1,06,833.33