Question

Riley Corp. acquired equipment on January 2, Year 1, at a cost of $570,000 with an...

Riley Corp. acquired equipment on January 2, Year 1, at a cost of $570,000 with an estimated useful life of twelve years and an estimated residual value of $49,500. Please be sure to label each section of your answer below.

Required:

(a) What is the annual amount of depreciation for each of the first three years, assuming the straight-line method of depreciation is used? Please show your calculation(s).
(b) What is the book value of the equipment on January 1, Year 4? Please show your calculation.
(c) Assuming that the equipment is sold on January 2, Year 4, for $426,500, journalize the entry to record the sale.
(d) Assuming that the equipment is sold on January 2, Year 4, for $495,000 (instead of $426,500), journalize the entry to record the sale.
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

(a)

Depreciation under Straight-line method = (Cost - Residual value) / Estimated useful life

= ($570,000 - $49,500) / 12

= $43,375

(b)

Accumulated depreciation at January 1, Year 4 = $43,375 * 3 = $130,125

Book value = Cost - Accumulated depreciation

= $570,000 - $130,125

= $439,875

(c)

Account Titles and Explanation Debit Credit
Cash $426,500
Accumulated depreciation $130,125
Loss on sale (plug) $13,375
Equipment $570,000

(d)

Account Titles and Explanation Debit Credit
Cash $495,000
Accumulated depreciation $130,125
Gain on sale (plug) $55,125
Equipment $570,000
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Equipment acquired on January 6 at a cost of $231,800, has an estimated useful life of...
Equipment acquired on January 6 at a cost of $231,800, has an estimated useful life of 8 years and an estimated residual value of $30,200. a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation? Year Depreciation Expense Year 1 $ Year 2 $ Year 3 $ b. What was the book value of the equipment on January 1 of Year 4? $ c. Assuming that the equipment was sold on January...
Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $220,800, has an...
Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $220,800, has an estimated useful life of 10 years and an estimated residual value of $28,800. a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation? Year Depreciation Expense Year 1 $ Year 2 $ Year 3 $ b. What was the book value of the equipment on January 1 of Year 4? $ c. Assuming that the equipment...
Entries for Sale of Fixed Asset Equipment acquired on January 8 at a cost of $141,540,...
Entries for Sale of Fixed Asset Equipment acquired on January 8 at a cost of $141,540, has an estimated useful life of 16 years, has an estimated residual value of $8,900, 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 99,442. 1. Journalize the entry to record depreciation...
Entries for Sale of Fixed Asset Equipment acquired on January 8 at a cost of $174,340,...
Entries for Sale of Fixed Asset Equipment acquired on January 8 at a cost of $174,340, has an estimated useful life of 17 years, has an estimated residual value of $9,950, 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 127,727. 1. Journalize the entry to record depreciation...
Entries for Sale of Fixed Asset Equipment acquired on January 8 at a cost of $105,310,...
Entries for Sale of Fixed Asset Equipment acquired on January 8 at a cost of $105,310, has an estimated useful life of 12 years, has an estimated residual value of $7,150, 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? $ 72,590 b. Assuming that the equipment was sold on April 1 of the fifth year for 63,680. 1. Journalize the entry to record...
Entries for Sale of Fixed Asset Equipment acquired on January 8 at a cost of $198,600,...
Entries for Sale of Fixed Asset Equipment acquired on January 8 at a cost of $198,600, has an estimated useful life of 20 years, has an estimated residual value of $8,800, 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 152,067. 1. Journalize the entry to record depreciation...
Equipment was acquired at the beginning of the year at a cost of $662,500. The equipment...
Equipment was acquired at the beginning of the year at a cost of $662,500. The equipment was depreciated using the double-declining-balance method based on an estimated useful life of 9 years and an estimated residual value of $48,430. A. What was the depreciation for the first year? Round your intermediate calculations to 4 decimal places. Round the depreciation for the year to the nearest whole dollar. B. Assuming that the equipment was sold at the end of the second year...
Equipment was acquired at the beginning of the year at a cost of $537,500. The equipment...
Equipment was acquired at the beginning of the year at a cost of $537,500. The equipment was depreciated using the double-declining-balance method based on an estimated useful life of 9 years and an estimated residual value of $47,040. A. What was the depreciation for the first year? Round your intermediate calculations to 4 decimal places. Round the depreciation for the year to the nearest whole dollar. B. Assuming that the equipment was sold at the end of the second year...
10/2 Sale of Equipment Equipment was acquired at the beginning of the year at a cost...
10/2 Sale of Equipment Equipment was acquired at the beginning of the year at a cost of $600,000. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $48,150. a. What was the depreciation for the first year? Round your answer to the nearest cent. $ b. Using the rounded amount from Part a in your computation, determine the gain(loss) on the sale of the equipment, assuming...
Equipment was acquired at the beginning of the year at a cost of $79,500. The equipment...
Equipment was acquired at the beginning of the year at a cost of $79,500. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,500. a. What was the depreciation expense for the first year? $ b. Assuming the equipment was sold at the end of the second year for $59,900, determine the gain or loss on sale of the equipment. $   c. Journalize the entry to...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT