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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
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 $101,000 cash. The equipment was estimated to have a five-year life and $4,000 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 $900. | |||
Dec. | 31, | Year | 2 | Recorded depreciation expense for Year 2. | |||
Jan. | 1, | Year | 3 | Made an adjustment costing $3,600 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 $1,950 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 $11,200. 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 $30,000 for the equipment. |
Required: Prepare the journal entry for the disposal of the equipment on October 1, Year 6.
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