Entries for Sale of Fixed Asset Equipment acquired on January 5 at a cost of $19

Question

Entries for Sale of Fixed Asset Equipment acquired on January 5 at a cost of $190,400, has an estimated useful life of 20 years, has an estimated residual value of $7,600, and is depreciated by the straight- ine method. a. What was the book value of the equipment at December 31 the end of the fourth year? b. Assuming that the equipment was sold on April 1 of the fifth year for 145,490. 1. Journalize the entry to record depreciation for the three months until the sale date. Round your answers to the nerest whole dollar if required 2. Journalize the entry to record the sale of the equipment. If an amount box does not require an entry, leave it blank. Do not round intermediate calculations

Explanation / Answer

a) Depreciation = 190400 - 7600 / 20 = 9140

Book value of equipment at the end of fourth year = 190,400 - 9140 X 4 = 153,840

b)

1) Depreciation expense - equipment (9140 X 3/12) 2285

Accumulated Depreciation - Equipment 2285

2) Cash 145,490

Accumulated depreciation 38845

(9140 X 4 + 2285)

Loss on sale of equipment 6065

Equipment 190,400

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