The balance sheets of Tully Corp. showed the following at December 31, 2020 and 2019:

Required:

a. If there have not been any purchases, sales, or other transactions affecting this equipment account since the equipment was first acquired, what is the amount of depreciation expense for 2020?

b. Assume the same facts as in part a, and assume that the estimated useful life of the equipment is four years and the estimated salvage value is $60,000. Determine:

1. What the original cost of the equipment was.

2. What depreciation method is apparently being used. Explain your answer.

3. When the equipment was acquired.

c. Assume that the equipment is sold on December 31, 2020, for $141,600. Use the horizontal model (or write the journal entry) to show the effect of the sale of the equipment.

Transcribed Image Text:

December 31, 2020 December 31, 2019 Equipment, less accumulated depreciation of $240,000 at December 31, 2020, and $150,000 at December 31, 2019. $180,000 $270,000