Question
J Farms purchased three new tractors for $25,000 each. J expects the tractors to have a usefulfd life of 6 years and a residual value
J Farms purchased three new tractors for $25,000 each. J expects the tractors to have a usefulfd life of 6 years and a residual value of $5,000. One of the tractors has not performed as expected, so J sold the tractor after 2 years for $18,000. J sold the remaining tractors for $5,000 at the end of the 6 years. J group uses group depreciation on a straight-line basis.
Required:
a. Prepare the journal entry for the purchase.
b. Prepare the journal entry for the first and second years depreciation.
c. Record the journal entry for the disposal of the tractor.
d. Record the journal entry for the third years depreciation.
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