Question

Equipment acquired on January 6 at a cost of $335,190, has an estimated useful life of 13 years and an estimated residual value of $68,690.

Required:

	a. What was the annual amount of depreciation for Years 1-3 using the straight-line method of depreciation?
	b. What was the book value of the equipment on January 1 of Year 3?
	c. Assuming that the equipment was sold on January 3 of Year 4 for $256,655, journalize the entry to record the sale. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
	d. Assuming that the equipment had been sold on January 3 of Year 4 for $287,515 instead of $256,655, journalize the entry to record the sale. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

Chart of Accounts

CHART OF ACCOUNTS
General Ledger
ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Supplies 119 Prepaid Insurance 120 Land 123 Delivery Truck 124 Accumulated Depreciation-Delivery Truck 125 Equipment 126 Accumulated Depreciation-Equipment 130 Mineral Rights 131 Accumulated Depletion 132 Goodwill 133 Patents LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Owner's Capital 311 Owner's Drawing	REVENUE 410 Sales 610 Interest Revenue 620 Gain on Sale of Delivery Truck 621 Gain on Sale of Equipment EXPENSES 510 Cost of Merchandise Sold 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Delivery Truck 523 Delivery Expense 524 Repairs and Maintenance Expense 529 Selling Expenses 531 Rent Expense 532 Depreciation Expense-Equipment 533 Depletion Expense 534 Amortization Expense-Patents 535 Insurance Expense 536 Supplies Expense 539 Miscellaneous Expense 710 Interest Expense 720 Loss on Sale of Delivery Truck 721 Loss on Sale of Equipment

First Questions

a. What was the annual amount of depreciation for Years 1-3 using the straight-line method of depreciation?

Year 1 depreciation expense
Year 2 depreciation expense
Year 3 depreciation expense

b. What was the book value of the equipment on January 1 of Year 3?

Journal

c. Assuming that the equipment was sold on January 3 of Year 4 for $256,655, journalize the entry to record the sale. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

Answer 1