The questions is about chapter 9 (Reporting and Analyzing Long Lived Assets) of accounting by Paul Kimmel. Please I need detail explanation of how you know the months eg I see the table (64000-3000)/5x3 the 5 stands for the 5years given in the statement but the month (ie the 3) I don't where it is coming from. this the question
Sunland Company owns equipment that cost $73,000 when purchased
on January 1, 2019. It has been depreciated using the straight-line
method based on an estimated salvage value of $13,000 and an
estimated useful life of 5 years.
Prepare Sunland Company’s journal entries to record the sale of the
equipment in these four independent situations. (Credit
account titles are automatically indented when amount is entered.
Do not indent manually. If no entry is required, select "No Entry"
for the account titles and enter 0 for the
amounts.)
| (a) | Sold for $39,000 on January 1, 2022. | |
| (b) | Sold for $39,000 on May 1, 2022. | |
| (c) | Sold for $22,000 on January 1, 2022. | |
| (d) | Sold for $22,000 on October 1, 2022. |
| Depreciation expense per year | |||||||||
| (73000-13000)/5 | |||||||||
| 12000 | |||||||||
| so from Jan 1,2019 to december 31,2021 three year depreciation already charged | |||||||||
| Accumulated depreciation | 12000*3 | ||||||||
| 36000 | |||||||||
| book value on jan 1,2022 | 73000-36000 | (cost - accumulated depreciation) | |||||||
| 37000 | |||||||||
| No | Account titles & Explanations | Debit | Credit | ||||||
| a) | cash | 39,000 | |||||||
| Accumulated Depreciation | 36000 | ||||||||
| Gain on disposal | 2,000 | ||||||||
| Equipment | 73,000 | ||||||||
| b) | Depreciation expense | 4000 | |||||||
| Accumulated Depreciaiton | 4000 | ||||||||
| (12000/12)*4 | |||||||||
| (since sold on May 1 we need to provide depreciation for 4 months) | |||||||||
| cash | 39,000 | ||||||||
| Accumulated Depreciation (36000+4000) | 40000 | ||||||||
| Gain on disposal | 6,000 | ||||||||
| Equipment | 73,000 | ||||||||
| c) | cash | 22,000 | |||||||
| Accumulated Depreciation | 36000 | ||||||||
| loss on disposal | 15,000 | ||||||||
| Equipment | 73,000 | ||||||||
| d) | Depreciation expense | 4000 | |||||||
| Accumulated Depreciaiton | 4000 | ||||||||
| cash | 22,000 | ||||||||
| Accumulated Depreciation | 40000 | ||||||||
| loss on disposal | 11,000 | ||||||||
| Equipment | 73,000 | ||||||||
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