Equipment was acquired at the beginning of the year at a cost of $75,720. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,920. Required: a. What was the depreciation expense for the first year? b. Assuming the equipment was sold at the end of the second year for $57,370, determine the gain or loss on sale of the equipment. c. Journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles. Chart of Accounts CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Inventory 117 Supplies 119 Prepaid Insurance 120 Land 121 Equipment 122 Accumulated Depreciation 132 Goodwill 133 Patents LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends REVENUE 410 Sales 610 Interest Revenue 620 Gain on Sale Equipment EXPENSES 510 Cost of Goods Sold 520 Salaries Expense 521 Advertising Expense 522 Supplies Expense 523 Delivery Expense 524 Rent Expense 525 Insurance Expense 531 Repairs and Maintenance Expense 541 Depreciation Expense 543 Depletion Expense 544 Amortization Expense-Patents 591 Miscellaneous Expense 710 Interest Expense 720 Loss on Sale of Equipment First Questions a. What was the depreciation expense for the first year? Depreciation expense b. Assuming the equipment was sold at the end of the second year for $57,370, determine the gain or loss on sale of the equipment. Sale of the equipment General Journal c. Journalize the entry to record the sale on December 31. Refer to the Chart of Accounts for exact wording of account titles. PAGE 1 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4

Equipment was acquired at the beginning of the year at a cost of $75,720. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,920. Required: a. What was the depreciation expense for the first year? b. Assuming the equipment was sold at the end of the second year for $57,370, determine the gain or loss on sale of the equipment. c. Journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles. Chart of Accounts CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Inventory 117 Supplies 119 Prepaid Insurance 120 Land 121 Equipment 122 Accumulated Depreciation 132 Goodwill 133 Patents LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends REVENUE 410 Sales 610 Interest Revenue 620 Gain on Sale Equipment EXPENSES 510 Cost of Goods Sold 520 Salaries Expense 521 Advertising Expense 522 Supplies Expense 523 Delivery Expense 524 Rent Expense 525 Insurance Expense 531 Repairs and Maintenance Expense 541 Depreciation Expense 543 Depletion Expense 544 Amortization Expense-Patents 591 Miscellaneous Expense 710 Interest Expense 720 Loss on Sale of Equipment First Questions a. What was the depreciation expense for the first year? Depreciation expense b. Assuming the equipment was sold at the end of the second year for $57,370, determine the gain or loss on sale of the equipment. Sale of the equipment General Journal c. Journalize the entry to record the sale on December 31. Refer to the Chart of Accounts for exact wording of account titles. PAGE 1 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Required:

a.	What was the depreciation expense for the first year?
b.	Assuming the equipment was sold at the end of the second year for $57,370, determine the gain or loss on sale of the equipment.
c.	Journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles.

Chart of Accounts

CHART OF ACCOUNTS

General Ledger

	ASSETS
110	Cash
111	Petty Cash
112	Accounts Receivable
114	Interest Receivable
115	Notes Receivable
116	Inventory
117	Supplies
119	Prepaid Insurance
120	Land
121	Equipment
122	Accumulated Depreciation
132	Goodwill
133	Patents

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends

	REVENUE
410	Sales
610	Interest Revenue
620	Gain on Sale Equipment

	EXPENSES
510	Cost of Goods Sold
520	Salaries Expense
521	Advertising Expense
522	Supplies Expense
523	Delivery Expense
524	Rent Expense
525	Insurance Expense
531	Repairs and Maintenance Expense
541	Depreciation Expense
543	Depletion Expense
544	Amortization Expense-Patents
591	Miscellaneous Expense
710	Interest Expense
720	Loss on Sale of Equipment

First Questions

a. What was the depreciation expense for the first year?

Depreciation expense

b. Assuming the equipment was sold at the end of the second year for $57,370, determine the gain or loss on sale of the equipment.

Sale of the equipment

General Journal

c. Journalize the entry to record the sale on December 31. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4

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