Question

In: Accounting

Entries for Sale of Fixed Asset Equipment acquired on January 8 at a cost of $136,830,...

Entries for Sale of Fixed Asset

Equipment acquired on January 8 at a cost of $136,830, has an estimated useful life of 16 years, has an estimated residual value of $8,350, 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 97,682.

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.

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.

Expert Solution

a)

Cost of equipment = $136,830

Residual value = $8,350

Useful life = 16 Year

Annual depreciation = ( Cost price - Residual value)/Useful life

(136,830 - 8,350)/16

= $8,030

Accumulated depreciation for 4 years = 8,030 x 4

= $32,120

b)

1

Depreciation for 3 months = 8,030 x 3/12

= $2,008

Journal

Date	Account Title and Explanation	Debit	Credit
Apr. 1, Fifth year	Depreciation expense	2,008
	Accumulated depreciation - Equipment		2,008

2.

Book value of Equipment on April 1, Fifth year = Cost price - Accumulated depreciation

= 136,830 - (32,120 + 2,008)

= 136,830 - 34,128

= $102,702

Loss on sale of equipment = Book value - sale price

= 102,702 - 97,682

= $5,020

Journal

Date	Account Title and Explanation	Debit	Credit
Apr. 1, Fifth year	Cash	97,682
	Accumulated depreciation - Equipment	34,128
	Loss on disposal	5,020
	Equipment		136,830

ekkarill92 answered 1 year ago

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