A depreciation schedule for heavy equipment of Catalina Company was requested by your auditor soon after December 31, 2021, showing the additions, retirements, depreciation, and other data affecting the income of the company in the 4-year period 2018 to 2021, inclusive.

The following data were ascertained:

Balance of Equipment account, Jan. 1, 2018

Equipment No. 1 purchased Jan. 1, 2015, cost $ 50,000

Equipment No. 2 purchased July 1, 2015, cost 60,000

Equipment No. 3 purchased Jan. 1, 2016, cost 55,000

Equipment No. 4 purchased July 1, 2017, cost 70,000

Balance, Jan. 1, 2018 $235,000

The Accumulated DepreciationEquipment account previously adjusted to January 1, 2018, and entered in the ledger, had a balance on that date of $89,000

(depreciation on the four pieces of equipment from the respective dates of purchase, based on a 5-year life, no salvage value).

No charges had been made against the account before January 1, 2018.

Transactions between January 1, 2018, and December 31, 2021, which were recorded in the ledger, are as follows:

Jan. 1, 2019 Equipment No. 1 was sold for $6,000 cash; entry debited Cash and credited Equipment, $6,000.

July 1, 2019 Equipment No. 2 was traded for a larger one (No. 5), the agreed purchase price of which was $80,000. Catalina Company . paid the dealer $66,000 cash on the transaction.

The entry was a debit to Equipment and a credit to Cash, $66,000. The transaction has commercial substance.

July 1, 2020 Equipment No. 3 was damaged in a wreck to such an extent that it was sold as junk for $500 cash. Catalina Company . received $12,000 from the insurance company.

The entry made by the bookkeeper was a debit to Cash, $12,500, and credits to Miscellaneous Income, $500, and Equipment, $12,000.

July 1, 2021 A new Equipment (No. 6) was acquired for $92,000 cash and was charged at that amount to the Equipment account.

Entries for depreciation had been made by the bookkeeper at the close of each year as follows: 2018, $47,000; 2019, $42,600; 2020, $32,700; 2021, $35,400.

Instructions: USE APPROPRIATE FORMULAS

Organize your work as follows:

1. Calculate for each equipment (#1, #2, #3, #4) the annual depreciation. Total the annual depreciation for all equipment.

Prepare a schedule showing your work. Use appropriate formulas. SEE Schedule below in #9.

2. For Equipment #1, calculate the gain or loss on the sale of the equipment on Jan 1, 201

3. What would have been the correct journal entry for the Equipment #1 sale?

Show your entry below.

4. For Equipment #2 calculate its fair value at Jan 1, 2019, the date of the trade. Show a supporting schedule.

5. For Equipment #2, what would have been the correct entry recorded on 1/1/19? Show below.

Show below.

6. For Equipment #3 calculate the gain/loss on the sale and the receipt of insurance proceeds at 7/1/2020

7. For Equipment #3, what would have been the correct entry for the sale and receipt

of the insurance proceeds.

Show below

8. For equipment # 6, calculate the depreciation expense for 2021 (the current year)

Present your entry below