Question

Equipment acquired on January 8 at a cost of $101,300 has an estimated useful life of 13 years, has an estimated residual value of $9,000, 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. Assume that the equipment was sold on April 1 of the fifth year for $64,700.

1. Journalize the entry to record depreciation for the three months until the sale date. If an amount box does not require an entry, leave it blank. Round your answers to the nearest 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

Answer:
	Depreciation expense per Year                =   ( Cost (-) Residual value) / Useful Life                =   ( $ 101,300 (-) $ 9,000 ) / 13 Years                =      $ 92,300 / 13 Years                =     $ 7,100
	Accumulated Depreciation        = Depreciation expense per Year x 4 Years         = $ 7,100 x 4 Years         =   $ 28,400
	Book value of the equipment at the end of Foutyh year            = Cost (-) Accumulated Depreciation            =   $ 101,300 (-) $ 28,400            =     $ 72,900
	Book value of the equipment at the end of Foutyh year	$ 72,900
Date	Account Titles and Explanations	Debit (in $)	Credit (in $)
Apr-01	Depreciation Expense ( $ 7,100 x 3/12)	$ 1,775
	Accumulated depreciation - Equipment		$ 1,775
	(To record depreciation expense for the three months )
Apr-01	Cash	$ 64,700
	Accumulated depreciation - Equipment ( $ 28,400 + $ 1,775 )	$ 30,175
	Loss on Sale of Equipment - Bal. Fig.	$ 6,425
	Equipment		$ 101,300
	(To record depreciation expense for the three months )