Question
In: Accounting
Equipment acquired on January 6,2013, at a cost of 405,115, has an estimated useful life of...
Equipment acquired on January 6,2013, at a cost of 405,115, has an
estimated useful life of 16 years and an estimated residual value
of 61,595.
Required:
A). What was the annual amount of depreciation for the years
2013,2014,and 2015 using the straight line method of
depreciation?
B). What was the book value of the equipment on January 1,
2016
C). Assuming that the equipment was sold on January 3,2016 for
$325,545 journalize the entry to record the sale. Refer to the
chart of accounts for exact wording
D). Assuming that the equipment had been sold on January
3,2016 for $353,980 instead of 325,545, journalize the entry to
record the sale
Solutions
Expert Solution
a) Straight line depreciation = (Original cost-salvage value)/Useful life
= (405115-61595)/16
Straight line depreciation = 21470 per year
2013 dep = 21470
2014 dep = 21470
2015 dep = 21470
b) Book value on january 1, 2016 = 405115-(21470*3) = 340705
c) Journal entry :
| Date | accounts & explanation | debit | credit |
| Jan 3,2016 | Cash | 325545 | |
| Accumlated depreciation | 64410 | ||
| Loss on sale of equipment | 15160 | ||
| Equipment | 405115 | ||
| (TO record sale of equipment) |
d) ) Journal entry :
| Date | accounts & explanation | debit | credit |
| Jan 3,2016 | Cash | 353980 | |
| Accumlated depreciation | 64410 | ||
| Gain on sale of equipment | 13275 | ||
| Equipment | 405115 | ||
| (TO record sale of equipment) |
ekkarill92 answered 1 year agoRelated Solutions
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