A piece of equipment acquired on January 3, 1991, at a cost of $25,000, has an estimated useful life of 4 years and an estimated residual value of $5,000.

Instructions

a.What was the annual depreciation for the years 1991, 1992, and 1993, using the straight-line method of depreciation?

b.What was the book value of the equipment on December 31, 1993?

c.Assuming that the equipment was sold on May 1, 1994, for $7,500, journalize the entry to record the sale.

d. Assuming that the equipment was sold for $11,500 on January 2, 1994, instead of $7,500, journalize the entry to record the sale.