Question

Howarth Manufacturing Company purchased equipment on June 30, 2017, at a cost of $115,000. The residual value of the equipment was estimated to be $10,000 at the end of a five-year life. The equipment was sold on March 31, 2021, for $34,000. Howarth uses the straight-line depreciation method for all of its plant and equipment. Partial-year depreciation is calculated based on the number of months the asset is in service. Required: 1. Prepare the journal entry to record the sale. 2. Assuming that Howarth had instead used the double-declining-balance method, prepare the journal entry to record the sale. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entry to record the sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record sale of equipment. Note: Enter debits before credits. Event General Journal Debit Credit 1

Answer 1

| Answer: Depreciation under Straight Line Method = Colt - Residual value) Estimated useful life -($115,000- $10,000)/5 = $105,000/5 = $ 21000 Depreciation expense 2017 $10,500 (21000 x 6/12) 2018 |$21000 2019 $21000 2020 $21900 2021 $ 5250 21000 x312) $ 78,750 Journal Entry Date particulars Debit I credit March 31 cash . Ale dr $34,000 2021 Accumulated Depreciation All dr $78,750 Lots on sale $2250 - TO Equipment $115,000 (2) Depreciation under Double declining method = West-accumulated depreciation) / seseful life x2] Depreciation expense 2017 |$23000 ($115000-$0)/5x2x6112] 2018 $36800 $115000-$23000)/5X2] 2019 $22080 $ 115000 - $ 23000-$3680) 5x2) 2020 $13,248 ($115000- $ 2.3000-$36800-21080)/5x2] 2021 $1987 $ 115000-$23,000-$36800-22,080-13248)/5x2x3/12 897,115 rounded) o desmal places Journal Entry credit ] Date March 31 2021 particulars Cash Accumulated Depreciation to train on sale to Equipment Debit the dr & 34,000 Ale dr $97,115 $16,115 $115000