Part A) answer = $70430
Calculation of annual depreciation under straight line depreciation:
Depreciation = ($100870-$9550)/12 = $91320/12 = $7610
Thus, annual depreciation = $7610
Therefore, depreciation for 4 years = $7610 × 4 = $30440
Hence, book value at the end of 4th year = $100870 - $30440 = $70430
Part B)
First, compute the depreciation for 3 months from 1 january to 31 march:
Depreciation = depreciation for the year × 3/12
= $7610 × 3/12 = $1903
Date | journal | debit | credit |
1 april | depreciation | $1903 | |
To accumulated depreciation - equipment | $1903 | ||
(To record the depreciation for a period of 3 month) | |||
1 april | cash | $61657 | |
Accumulated depreciation ($30440+$1903) | $32343 | ||
Loss on sale of equipment | $6870 | ||
To equipment | $100870 | ||
(To record the sale of equipment) |
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