Morris Inc. recorded the following transactions over the life of a piece of equipment purchased in Year 1:

Jan.	1, Year 1		Purchased equipment for $14,400 cash. The equipment was estimated to have a five-year life and $6,370 salvage value and was to be depreciated using the straight-line method.
Dec.	31, Year 1		Recorded depreciation expense for Year 1.
Sept.	30, Year 2		Undertook routine repairs costing $721.
Dec.	31, Year 2		Recorded depreciation expense for Year 2.
Jan.	1, Year 3		Made an adjustment costing $3,330 to the equipment. It improved the quality of the output but did not affect the life and salvage value estimates.
Dec.	31, Year 3		Recorded depreciation expense for Year 3.
June.	1, Year 4		Incurred $361 cost to oil and clean the equipment.
Dec.	31, Year 4		Recorded depreciation expense for Year 4.
Jan.	1, Year 5		Had the equipment completely overhauled at a cost of $7,470. The overhaul was estimated to extend the total life to seven years. The salvage value did not change.
Dec.	31, Year 5		Recorded depreciation expense for Year 5.
Oct.	1, Year 6		Received and accepted an offer of $15,400 for the equipment.

Required

1. Use a horizontal statements model to show the effects of these transactions on the elements of the financial statements. The first event is recorded as an example.
2. Determine the amount of depreciation expense to be reported on the income statements for Years 1 through 5.
3. Determine the book value (cost accumulated depreciation) Morris will report on the balance sheets at the end of Year 1 through Year 5.
4. Determine the amount of the gain or loss Morris will report on the disposal of the equipment on October 1, Year 6
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6. 1. Use a horizontal statements model to show the effects of these transactions on the elements of the financial statements. The first event is recorded as an example. (Use + for increase, for decrease, and leave the cell blank if the element is not affected. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). If an element was not affected by the transactions, leave the cell blank.)

MORRIS INC.
Horizontal Statements Model
Date	Assets	=	Liabilities	+	Equity	Net Income	Statement of Cash Flows
Jan. 01, Year 1	+/-	=		+			-	IA
Dec. 31, Year 1		=		+
Sept. 30, Year 2		=		+
Dec. 31, Year 2		=		+
Jan. 01, Year 3		=		+
Dec. 31, Year 3		=		+
June 01, Year 4		=		+
Dec. 31, Year 4		=		+
Jan. 01, Year 5		=		+
Dec. 31, Year 5		=		+
Oct. 01, Year 6		=		+
Oct. 01, Year 6		=		+

Determine the amount of depreciation expense to be reported on the income statements for Years 1 through 5. (Round your answers to nearest dollar amount.)

Year	Depreciation Expense
Year 1
Year 2
Year 3
Year 4
Year 5

Determine the book value (cost accumulated depreciation) Morris will report on the balance sheets at the end of Year 1 through Year 5. (Round intermediate calculations and final answers to nearest dollar amount.)

Year	Book Value
Year 1
Year 2
Year 3
Year 4
Year 5

Determine the amount of the gain or loss Morris will report on the disposal of the equipment on October 1, Year 6. (Round intermediate calculations and final answer to nearest dollar amount.)

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