Depreciation and Disposal Problem Eqyipment acquired on June 1,2010 at a cost of

ID: 2451313 • Letter: D

Question

Depreciation and Disposal Problem

Eqyipment acquired on June 1,2010 at a cost of 71,500 has an estimated useful life of 4 yers and an estimated residual value of 4,500.

1. what was the annual amount of depreciation for the years 2010, 2011, and 2012 us ing the striaght line method of dep?

2.what was the book value of the equipment on Jan 1 2013?

3. assuming that the equipment was sold on Jan 2,2013 for 26,000, journalize the entry to record the sale.

4. instead, assume that the equipment had been sold on Jan 2, 2013 for 30,000 jourlize the entry to record the sale.

Total depreciation during the 4 years of useful life = 71500 - 4500 = $67000

Depreciation every year through straight line method = 67000 / 4 = $16750

Depreciation for 2010 = 16750 / 2 = $8375

Depreciation for 2011 and 2012 = $16750

Bokk value on Jan 1 2013 = 71500 - 8375 - 16750 - 16750 = $29625

Cash 26000

Loss on sale of equipment 3625

To Equipment 29625

Cash 30000

To Profit on sale of equipment 375

To Equipment 29625

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