Example Five: On January 1, 2018, OP Company purchased equipment to be used in t
ID: 2529596 • Letter: E
Question
Example Five:
On January 1, 2018, OP Company purchased equipment to be used in their business. The equipment cost $78,000. It will be used for 8 years, after which its salvage value (residual value) is estimated to be $6,000.
Required:
1. Record the purchase of the machine on January 1, 2017.
Date
Account Name
Debit
Credit
2. Complete the depreciation table below using straight-line depreciation.
Period Ended
Depreciation Expense
Accumulated Depreciation
End of Period Book Value
12-31-2018
12-31-2019
12-31-2020
12-31-2021
12-31-2022
12-31-2023
12-31-2024
12-31-2025
Record the depreciation expense as of December 31, 2018.
Date
Account Name
Debit
Credit
Suppose OP Company sells the equipment on December 31, 2021 for $44,000. Prepare the journal entry to record the sale.
Date
Account Name
Debit
Credit
Date
Account Name
Debit
Credit
Explanation / Answer
1. In the books of OP Company:
Annual depreciation = $ ( 78,000 - 6,000) / 8 = $ 9,000.
Depreciation Table:
In the books of OP Company:
If OP Company sells the equipment on December 31, 2021, for $ 44,000:
Date Account Titles Debit Credit $ $ January 1, 2018 Equipment 78,000 Cash 78,000Related Questions
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