### Gains and Losses**Scenario:**Logan purchased a machine on 01/01/17. Use the following data in your calculations:- **Cost**: $14,000- **Salvage Value**: $3,000- **Life**: 5 years- **Depreciation Method**: Straight Line (SL)**Questions:**1. **What is the depreciation amount per year?** 2. **What is the accumulated depreciation after 3 years?** 3. **What is the book value of the asset at the end of year 3?** 4. **The machine was sold at the end of 3 years for cash of $8,500.** - Did the company make a gain or a loss? - What was the amount of the gain or loss?**Instructions:**- Use the data provided to calculate and input your answers in the fields indicated.- Record the necessary journal entries in the general journal section.- Utilize dropdowns for account selections.> **Note:** The calculation of depreciation using the straight-line method (SL) involves subtracting the salvage value from the cost, then dividing by the useful life of the asset. This yields the annual depreciation expense. Accumulated depreciation is the total depreciation expense over the specified years.

Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected life of the assets = (14000 - 3000) / 5 years = 2,200Depreciation amount per year 2,200 Accumulated depreciation after 3 years ( 2200 x 3 years) 6,600 Book value of the assets at the end of 3 years (14000-6600) 7,400 Gain (loss) on sale = Sale value - Book value of the assets at the end of 3 years = 8,500 - 7,400 = 1,100 Gain or Loss Gain Amount of Gain 1,100 DATE ACCOUNTS DEBIT CREDIT Cash 8,500 Accumulated depreciation 6,600 Gain on sale 1,100 Machine 14,000

Business

Accounting

GAINS and LOSSES Logan purchased a machine on 01/01/17. Use the following data in your calculations: COST 14.000 SALVAGE VALUE 3.000 LIFE 5 YEARS DEPRECIATION METHOD: SL What is the depreciation amount per year? What is the Accumulated Depreciation after 3 years? What is the book value of the asset at the end of year 3? The machine was sold at the end of 3 years for cash of $8,500. Did the company make a GAIN or a LOSS? What was the AMOUNT of the gain or loss? General Journal Use dropdowns for your accounts. Thank you.

GAINS and LOSSES Logan purchased a machine on 01/01/17. Use the following data in your calculations: COST 14.000 SALVAGE VALUE 3.000 LIFE 5 YEARS DEPRECIATION METHOD: SL What is the depreciation amount per year? What is the Accumulated Depreciation after 3 years? What is the book value of the asset at the end of year 3? The machine was sold at the end of 3 years for cash of $8,500. Did the company make a GAIN or a LOSS? What was the AMOUNT of the gain or loss? General Journal Use dropdowns for your accounts. Thank you.

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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