Question

Howarth Manufacturing Company purchased equipment on June 30, 2017, at a cost of $170,000. The residual value of the equipment was estimated to be $20,000 at the end of a five-year life. The equipment was sold on March 31, 2021, for $54,000. 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.

Answer 1

Answer 1 Given Equipment Cast - Residual value = useful life. $ 170.000 $20,000 5 years Depreciation under straight line merched Cast - Salvage value Estimated leseful life = $ 17900 - 20.000 Syears = on Calculation of carrying Value of Equipment $ 39000 per amnem date of sale le 3l-march 2021 Year 2017 2018 x 6 months 2 months) 2019 Depreciation Expense $ 15000 ($ 3900x montrent 30000 $ 30,000 $ 30,00 $7500 $ 3900x ) $ 112.500 2020 2021 march 31, 2021 Journal Entry cash AL a - - - . DO Accumulated Depaeciation Alc. - Loss on sale $54000 $112. 500 $350 (balance figuse) Equipment Ale $ 170,oo

2- Depreciation under Double declining method = cost - Accumulated depreciation x2 useful life Year 2017 Depreciation Expense $3400 $17.90 - 0 T 5 x2x6montas Tramonth 2018 $ 54,400 ($ 1790- 3400 x2) s 2019 $32640 17998 - 3400-5448) x2 - 3400-sl 2020 $ 19584 1 79060 - 3460-54403-32642)x2 5 2021 $ 2933. (sounded) $143,562 $170,000 - 34ow -S4400-32540-1958472 25 - Novo- X2 march 3), 200$ Cash Accumulated Depreciation $ 5400 $ 143562 To $27562 Gain on sall Equipment Alc $ 170,000 Thank you