1. Infinity Corporation purchased equipment with a 10-year useful life and zero
ID: 2465204 • Letter: 1
Question
1.
Infinity Corporation purchased equipment with a 10-year useful life and zero residual value for $10,000. At the end of the fifth year, the equipment is sold for $6,000. The entry to record this sale will include _______. Assume the straight-line depreciation method is used.
Select all that apply and click Submit
a credit to Loss for $1,000
a credit to Gain for $6,000
a debit to Equipment for $6,000
a credit to Equipment for $10,000
a debit to Cash for $6,000
a debit to Accumulated Depreciation for $5,000
a credit to Gain for $1,000
Explanation / Answer
Equipment cost = $ 10,000, life = 10 years and method of depreciation = straight line method, salvage = zero value
Therefore, Depreciation for the year = $ 1,000
for 5 years, Accumulated Depreciation = $ 1000*5 = $ 5,000
Equipmnet sold for $ 6,000
gain on sale fo equipment = 6000 - 5000 = $ 1000
The entry=
Debit to Cash $ 6,000
Credit to Accumulated Depreciation $ 5,000
Credit to Gain $ 1,000
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