Reference no: EM132363340
Question
Equipment was acquired at the beginning of the year at a cost of $76,020. The equipment was depreciated using the straight-line method based on an estimated useful life of six years and an estimated residual value of $7,800.
(a) What was the depreciation expense for the first year?
(b) Assuming the equipment was sold at the end of the second year for $57,542, 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
General Ledger
ASSETS110
Cash111
Petty Cash112
Accounts Receivable114
Interest Receivable115
Notes Receivable116
Merchandise Inventory117
Supplies119
Prepaid Insurance120
Land121
Equipment122
Accumulated Depreciation132
Goodwill133
Patents
LIABILITIES210
Accounts Payable211
Salaries Payable213
Sales Tax Payable214
Interest Payable215
Notes Payable
EQUITY310
Owner, Capital 311
Owner, Drawing312
Income Summary
REVENUE410
Sales610
Interest Revenue620
Gain on Sale of Equipment
EXPENSES510
Cost of Merchandise Sold520
Salaries Expense521
Advertising Expense522
Supplies Expense523
Delivery Expense524
Rent Expense525
Insurance Expense531
Repairs and Maintenance Expense541
Depreciation Expense543
Depletion Expense544
Amortization Expense-Patents591
Miscellaneous Expense710
Interest Expense720
Loss on Sale of Equipment
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