Question

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 for the three months until the sale date. Round your answers to the nerest whole dollar if required. 2. Journalize the entry to record the sale of the equipment. If an amount box does not require an entry, leave it blank. Do not round intermediate calculations.

Answer 1

a) Book value at the end of fourth year :

Accumlated depreciation = (141540-8900/16)*4 = 33160

Book value at the end of fourth year = 141540-33160 = $108380

b) Journal entry

Date	account and explanation	debit	credit
Apr 1	Depreciation expense (141540-8900/16)*3/12	2073
	Accumlated depreciation-Fixed assets		2073
	(To record dep)
Apr 1	Cash	99442
	Accumlated depreciation-Fixed assets (8290*4)+2073	35233
	Loss on disposal of fixed assets	6865
	Fixed assets		141540
	(To record disposal of fixed assets)