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:

(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.

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