Instructions Equipment acquired on January 8 at a cost of $136,150 has an estimated useful life of 15 years, has an estimated residual value of $8,050, and is depreciated by the straight-line method. Required: 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 $93
Instructions Equipment acquired on January 8 at a cost of $136,150 has an estimated useful life of 15 years, has an estimated residual value of $8,050, and is depreciated by the straight-line method. Required: 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 $93
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Topic Video
Question
Entries for sale of fixed asset
Instructions
Chart of Accounts
First Question
Journal
Instructions
Equipment acquired on January 8 at a cost of $136,150 has an estimated useful life of 15 years, has an estimated residual value of $8,050, and is depreciated by the straight-line method.
Required:
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 $93,175, |
Chart of Accounts
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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First Question
a. What was the book value of the equipment at December 31 the end of the fourth year?
Journal
b. Assuming that the equipment was sold on April 1 of the fifth year for $93,175, journalize the entries to record the following (Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Round your answer to the nearest whole dollar.):
1. Depreciation for the three months until the sale date
PAGE 1
JOURNAL
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
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2. The sale of the equipment
PAGE 2
JOURNAL
ACCOUNTING EQUATION
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