Question

In: Accounting

SEE ATTACHED IMAGE AT BOTTOM -------- Sale of Equipment Equipment was acquired at the beginning of...

SEE ATTACHED IMAGE AT BOTTOM

--------

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 $43,305.

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

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 $103,197.

Round your answer to the nearest cent and enter as a positive amount.
$  

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.

Solutions

Expert Solution

a) Depreciation per year by SLM: = (Original Cost - Salvage value )/Estimated life
    = (637500-43305)/9
66021.67
Depreciation for the first year would be $66021.67
b) Note : Calculated book value of machine
Original Cost    637,500.00
Less: Depreciation for 8 years    528,173.36 (66021.67*8 Yr)
Net book value    109,326.64
Less :Sale price    103,197.00
Loss on sale of machine       (6,129.64)
Loss on sale of machine $6129.64
c) General Journal Debit Credit
CASH    103,197.00
Loss on Sale of Equipment         6,129.64
Accumulated Depreciation    528,173.36
       Equipment    637,500.00
(To record sale of machine)
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