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) | ||||
| Do rate answer if satisfied, else feel free to ask query in comment box. | ||||
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