Howarth Manufacturing Company purchased a lathe on June 30, 2014, at a cost of $165,000. The residual value of the lathe was estimated to be $15,000 at the end of a five-year life. The lathe was sold on March 31, 2018, for $50,000. Howarth uses the straight-line depreciation method for all of its plant and equipment. Partial-year depreciation is calculated based on the number of months the asset is in service. Required: 1. Prepare a schedule to calculate the gain or loss on the sale. 2. Prepare the journal entry to record the sale. 3. Assuming that Howarth had instead used the sum-of-the-years-digits depreciation method, prepare the journal entry to record the sale.

Prepare a schedule to calculate the gain or loss on the sale.

Loss

on sale of lathe

$2,500

Prepare the journal entry to record the sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

No	Event	General Journal	Debit	Credit
1	1	Cash	50,000
		Loss on sale	2,500
		Accumulated depreciationlathe	112,500
		Lathe		165,000

3. Assuming that Howarth had instead used the sum-of-the-years-digits depreciation method, prepare the journal entry to record the sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

No	Event	General Journal	Debit	Credit
1	1	Cash	50,000
		Accumulated depreciationlathe
		Gain on sale
		Lathe		165,000