1) On Jan1 2015, Wax purchased equipment for $60000 cash, expecting it to remain in service for 6 years. The corporation depreciates the equipment on a straight-line basis, with $2000 residual value. On May31 2017, the corporation sold the equipment for $18000 cash. Record both depreciation expense for 2017 and sale of the equipment on May31 2017.
2) Equipment was acquired on Jan1 2014, at a cost of $170000. The equipment was originally estimated to have a salvage value of $10000 and an estimated life of 10 years. Depreciation has been recorded through Dec31 2016, using straight-line method. On Jan1 2017, the estimated salvage value was revised to $16000 and the useful life was revised to a total of 8 years. Calculate depreciation expense for 2017 and prepare the journal entry.
1) Journal entry
Date | account and explanation | Debit | Credit |
May 31 | Depreciation expense (58000/6)*5/12 | 4028 | |
Accumulated depreciation-equipment | 4028 | ||
May 31 | Cash | 18000 | |
Accumulated depreciation-equipment (9667*2+4028) | 23362 | ||
Loss on sale of equipment | 18638 | ||
equipment | 60000 | ||
(To record sale of equipment) | |||
2) Accumulated depreciation = (170000-10000/10)*3 = 48000
Revised depreciation = (170000-48000-16000)/5 = 21200
Date | account and explanation | Debit | Credit |
2017 | Depreciation expense | 21200 | |
Accumulated depreciation-equipment | 21200 |
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