Question

# 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 was sold on January 3 of Year 4 for \$155,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.

Cash

Accumulated Depreciation-Equipment

Loss on Sale of Equipment

Equipment

d. Assuming that the equipment had been sold on January 3 of Year 4 for \$166,500 instead of \$155,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.

Cash

Accumulated Depreciation-Equipment

Equipment

Gain on Sale of Equipment

a) Calculate depreciation expense :

Year 1 = (220800-28800/10) = 19200

Year 2 = 19200

Year 3 = 19200

b) Book value of equipment on january 1 of year 4 = 220800-(19200*3) = \$163200

c) Journal entry :

 Date account & expalantion debit credit Cash 155000 Accumlated depreciation 57600 Loss on Sale of Equipment 8200 Equipment 220800 (To record sale of equipment)

d) Journal entry :

 Date account & expalantion debit credit Cash 166500 Accumlated depreciation 57600 Gain on Sale of Equipment 3300 Equipment 220800 (To record sale of equipment)

#### Earn Coins

Coins can be redeemed for fabulous gifts.