Exercise 10-17 (Algorithmic) Entries for Sale of Fixed Asset Equipment acquired
ID: 2358857 • Letter: E
Question
Exercise 10-17 (Algorithmic) Entries for Sale of Fixed Asset Equipment acquired on January 5, 2009, at a cost of $734,520, has an estimated useful life of 12 years, has an estimated residual value of $60,600, and is depreciated by the straight-line method. a. What was the book value of the equipment at December 31, 2012, the end of the year? $ b. Assume that the equipment was sold on October 1, 2013, for $430,300. Hide 1. Journalize the entries to record depreciation for the nine months until the sale date. Hide 2. Journalize the entries to record the sale of the equipment. If an amount box does not require an entry, leave it blank or enter "0".Explanation / Answer
Exercise 10-17 (Algorithmic) Entries for Sale of Fixed Asset Equipment acquired on January 5, 2009, at a cost of $734,520, has an estimated useful life of 12 years, has an estimated residual value of $60,600, and is depreciated by the straight-line method. a. What was the book value of the equipment at December 31, 2012, the end of the year? $ straight line depreciation = (734,520 – 60,600)/12 = $56,160 per year 2009 – 2012 = 4 years of depreciation 56,160*4 = 224,640 Book value at Dec 31, 2012 = 734,520 – 224,640 = $509,880 b. Assume that the equipment was sold on October 1, 2013, for $430,300. Hide 1. Journalize the entries to record depreciation for the nine months until the sale date. 56,160*9/12 = 42,120 Debit: Depreciation expense 42,120 Credit: Accumulated depreciation 42,120 2. Journalize the entries to record the sale of the equipment. If an amount box does not require an entry, leave it blank or enter "0". Debit: Cash 430,300 Debit: Accumulated depreciation 266,760 Debit: Loss on sale of equipment 37,460 Credit: Equipment 734,520
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