Question

Sale of Equipment Equipment was acquired at the beginning of the year at a cost of $575,000. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $44,745. 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 $98,037. 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.

Answer 1

• Requirement [a]

A	Cost	$          575,000.00
B	Residual Value	$            44,745.00
C=A - B	Depreciable base	$          530,255.00
D	Life [in years]	9
E=C/D	Annual SLM depreciation	$            58,917.22

Depreciation for the first year = $ 58,917.22

• Requirement [b]

Answer: Loss on sale = $ 5,625.24

A	Cost of equipment	$575,000.00
B	Annual Depreciation	$58,917.22
C = A x 8 years	Accumulated Depreciation at the end of 8th year	$471,337.76
D = A - C	Book Value at the time of sale	$103,662.24
E	Sold for	$98,037.00
F = E - D	Loss on Sale	$5,625.24

• Requirement [c]

Date	Accounts title	Debit	Credit
31 Dec Year 8	Cash	$98,037.00
	Accumulated Depreciation Equipment	$471,337.76
	Loss on sale of equipment	$5,625.24
	Equipment		575,000.00
	(Equipment sold)