Sale of Equipment Equipment was acquired at the beginning of the year at a cost

Question

Sale of Equipment

Equipment was acquired at the beginning of the year at a cost of $625,000. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $47,545.

a. What was the depreciation for the first year? Round your answer to the nearest cent.
$

b. Using the rounded amount from Part a in your computation, determine the gain(loss) on the sale of the equipment, assuming it was sold at the end of year eight for $106,807.

Round your answer to the nearest cent and enter as a positive amount.
$

c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Round your answers to the nearest cent.

Explanation / Answer

a Depreciation for the first year=(625000-47545)/9= $64161.67 b Accumulated depreciation for 8 years=64161.67*8= $516293.36 Book value at the date of sale = 625000-516293.36= $108706.64 Loss on sale=108706.64-106807= $1899.64 c Cash 106807 Accumulated depreciation-Equipment 516293.36 Loss on sale of equipment 1899.64          Equipment 625000

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