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ssigmentMain dolinvoker asionmen Welcome to PortalGuard Chapter 10 Cengage.. Show Me w Calculator ries for sale of fixed asset Chart of Accounts First Question Journal nstructions Equioment acquired on January 8 at a cost of $168,000 has an estimated usetul ite of 18 years, has an estimated residual value of $1 5,000, and is A What was the book vale of the equipment at December 31 the end of the fourth year? B Assuming that the equipment was sold on Aprt t of the ith year tor $125,000, ourmalize the enthies to record (1) months until the sale date and (2) the sale of the equipmentExplanation / Answer
Answer : A) CALCULATION OF THE DEPRECIATION AS PER STRAIGHT LINE METHOD Purchase Cost of Equipment $ 1,68,000.00 Less: Salvage Value $ 15,000.00 Net Value for Depreciation $ 1,53,000.00 Usefule life of the Assets 18 years Depreciation per year = Value for Depreciation / 18 years = 8,500.00 Total Depreciation in 4 years = ($ 8,500 X 4)= 34,000.00 Book Value = Purchae price - Total Depreciation = Purchase Price = $ 1,53,000 Less By "- " By Total Depreciation in 4 years = $ 34,000 Book value at the end of 4 years = $ 1,19,000 Answer : B) Book Value as on April 01 Book Value at the end of 4th year = $ 1,19,000 Depreciation for the 3 months $ 2,125 Book Value = $ 1,16,875 Journal Entries Date Account Title and explanation Debit Credit April, 01 5th year Depreciation (8,500 X 3 / 12) $ 2,125 To Equipmet $ 2,125 (To Record the depreciation for 3 monts) April, 01 5th year Cash $ 1,25,000 To Equipment $ 1,16,875 To Gain on sale of Equipment $ 8,125 (To Record the sale of Equipment)
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