Question

Problem 2
A piece of equipment costs $10,000 and has a residual (salvage value) of zero. It has a life of 5 years.
	(use the straight-line method)
A.) What is the depreciation Expense for year 1?
What is the depreciation Expense for year 2?
What is Accumulated depreciation at the end of year 2?
B.) If we sold the piece of equipment at the end of year 2, what would be the journal entry?
The selling price is $9,000.
	Debit	Credit
Problem 3
We purchase a piece of equipment by issuing a $10,000,
90-day note which was discounted at the rate of 6%.
A) What is the journal entry for the purchase of the equipment?
	Debit	Credit
B) What is the journal entry for the payment of the note payable?
	Debit	Credit
Problem 4
We sold ABC company merchandise on account for $12,000
They were unable to pay it so we changed it to a notes receivable for 30 days at 7%.
A) What is the journal entry to change the AR to a NR
	Debit	Credit
B) What is the journal entry to show receiving the payment for the note receivable and interest?
	Debit	Credit

Answer 1

a)

Cost of Equipment	$ 10,000
Less; Salvage value	$             -
Depreciable value	$ 10,000
Life of assets	5 Years
Depreciation per year ($10,000/5)	$    2,000
Depreciation for 1st Year	$    2,000
Depreciation for 2nd Year	$    2,000
Accumulated depreciation on 2nd year ($2,000+$2,000)	$    4,000

b)

Cash	$ 9,000
Accumulated depreciation	$ 4,000
Equipment		$ 10,000
Gain on sale of equipment ($9,000+$4,000-$10,000)		$    3,000

Please note that, Only one question can be answered at a time