Equipment was acquired at the beginning of the year at a cos

Equipment was acquired at the beginning of the year at a cost of $79,440. The equipment was depreciated using the straight-line method based on an estimated useful life of six years and an estimated residual value of $7,500.

Required:

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

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(a)	What was the depreciation expense for the first year?
(b)	Assuming the equipment was sold at the end of the second year for $59,897, 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. PAGE 1 JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 2 3 4

Solution

a Depreciation expense for the first year = (79440-7500)/6= 11990 b Book value at the end of second year = 79440-(11990*2)= 55460 Gain on sale = 59897-55460= 4437 c Cash 59897 Accumulated depreication-Equipment 23980          Equipment 79440          Gain on sale 4437