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

ASSETS110Cash111Petty Cash112Accounts Receivable114Interest Receivable115Notes Receivable116Merchandise Inventory117Supplies119Prepaid Insurance120Land121Equipment122Accumulated Depreciation132Goodwill133Patents

LIABILITIES210Accounts Payable211Salaries Payable213Sales Tax Payable214Interest Payable215Notes Payable

EQUITY310Owner, Capital311Owner, Drawing312Income Summary

REVENUE410Sales610Interest Revenue620Gain on Sale of Equipment

EXPENSES510Cost of Merchandise Sold520Salaries Expense521Advertising Expense522Supplies Expense523Delivery Expense524Rent Expense525Insurance Expense531Repairs and Maintenance Expense541Depreciation Expense543Depletion Expense544Amortization Expense-Patents591Miscellaneous Expense710Interest Expense720Loss on Sale of Equipment