Ace Corporation purchased equipment on January 1, 2011 for the following: Purcha

Question

Ace Corporation purchased equipment on January 1, 2011 for the following: Purchase price $100,000 Sales tax 6,000 Installation 3,000 Delivery 1,000 Total $110,000 Ace estimates that it will use the equipment for six years and its residual value will be $20,000. Ace uses the straight line method of depreciation and its accounting year end is December 31. On October 31, 2012 Ace sells the equipment for $75,000. Required: Prepare all necessary journal entries and adjusting journal entries for Ace for 2011 and 2012.

Explanation / Answer

asset value as on oct = $110000 -$15000-$12500 = $82500

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