Smythe Co, purchased computer equipment on January 1, 2011 for $6,500. The compu

Question

Smythe Co, purchased computer equipment on January 1, 2011 for $6,500. The computer equipment had an estimated life of 4 years and an estimated redidual value of $900. The company depreciated the equipment using the straight-line method. On January 1, 2014 the company sold the computer equipment for $1,000. Prepare the journal entry to record the sale. Smythe purchased a truck on January 1. 2010 for $28.500. The company deeded to deprecate the truck over a 4-year period using the straight-line method. On January 1. 2012, the company determined that a 6-year life should have been used to depreciate the truck. The estimated residual value of $4,500 was not affected by the revision of the asset s life. Determine the amounts to be recorded as annual depreciation expense for 2010 and 2012.

Explanation / Answer

11/1/2011 $6,500 Life (Years) 4 Residual Life $900 Depriciation for 3 years $4,200 11/1/2014 Asset Sold $1,000 Value as on 11/1/14 $2,300 Dr Cr Cash A/c $1,000 Loss on sale of asset $1,300 To Asset A/c $2,300 11/1/2010 $28,500 Life (Years) 4 Residual Life $4,500 Depriciation for 2010 $18,000 11/1/2010 $28,500 Life (Years) 6 Residual Life $4,500 Depriciation for 2012 $12,000

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