equipment acquired on January 8 at a cost of $194,250, has an estimated useful l

Question

equipment acquired on January 8 at a cost of $194,250, has an estimated useful life of 20 years, has an estimated residual value of $8,050, 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 149,422. 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. Check My Work2 more Check My Work uses remaining.

Explanation / Answer

Depreciation expense (cost - salvage value)/estimated useful life (194,250 - 8,050)/20 9310 a) Book value of the Equipment at the end of fourth year Original cost 194,250 Accumulated dep (9310*4)= 37240 Book value at the end of fourth year 157,010 b) Date Accounting title & explanation Debit Credit 1) 1-Apr Depreciation expense 2328 Accumulated depreciation 2328 (9310/12*3) 2) 1-Apr cash 149,422 Accumulated depreciation (37,240+2328) 39568 loss on disposal 5,261 Equipment 194,250

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