Entries for Sale of Fixed Asset Equipment acquired on Januar

Entries for Sale of Fixed Asset Equipment acquired on January 8 at a cost of $139,230, has an estimated useful life of 17 years, has an estimated residual value of $9,350, and is depreclated by the straight-line 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 101,695 1· Journalize the entry to record depreciation for the three months until the sale date. Round your answers o 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.

Solution

a) Depreciation expense per year = (139230-9350/17) = 7640 per year

Book value at the end of 4th year = 139230-(7640*4) = $108670

b) Journal entry :

Date	account & explanation	debit	credit
	Depreciation expense (7640*3/12)	1910
	Accumlated depreciation		1910
	(To record depreciation)
	Cash	101695
	Accumlated depreciation (7640*4+1910)	32470
	Loss on sale of equipment	5065
	Equipment		139230
	(To record Sale of equipment)