Question

2)

Entries for Sale of Fixed Asset

Equipment acquired on January 8 at a cost of $189,070, has an estimated useful life of 19 years, has an estimated residual value of $8,950, 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. Assuming that the equipment was sold on April 1 of the fifth year for 142,855.

1. Journalize the entry to record depreciation for the three months until the sale date. Round your answers to the nerest whole dollar if required.

	Cash

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

• Workings

A	Cost	$          189,070.00
B	Residual Value	$              8,950.00
C=A - B	Depreciable base	$          180,120.00
D	Life [in years]	19
E=C/D	Annual SLM depreciation	$              9,480.00

• Requirement [a]
  Total Depreciation for 4 years = $ 9480 x 4 = $ 37,920

Book Value = $ 189070 – 37920 = $ 151,150 Answer

• Requirement [b]

Date	Accounts title	Debit	Credit
01-Apr-19	Depreciation expense – Equipment [$9480 x 3/12]	$        2,370.00
	Accumulated Depreciation - Equipment		$    2,370.00
	(depreciation expense recorded for 3 months)

• Requirement [c]

Date	Accounts Titles	Debit	Credit
01-Apr	Cash	$ 142,855.00
	Accumulated Depreciation – Equipment [37920 + 2370]	$     40,290.00
	Loss on Sale	$       5,925.00
	Equipment		$ 189,070.00
	(to record sale)