Morris Incorporated recorded the following transactions over the life of a piece of equipment purchased in Year 1 : January 1, year 1 Purchased equipment for $14,800 cash. The equipment was estimated to have a five-year life and $6,710 salvage value and was to be depreciated using the straight-line method. December 31, Year 1 Recorded depreciation expense for Year 1 . September 30 , Year 2 Undertook routine repairs costing $772. December 31, year 2 Recorded depreciation expense for Year 2. January 1, Year 3 Made an adjustment costing $2,530 to the equipment. It improved the quality of the output but did not affect the life and salvage value estimates. December 31, Year 3 Recorded depreciation expense for Year 3. June 1 , Year 4 Incurred $312 cost to oil and clean the equipment. December 31, Year Recorded depreciation expense for Year 4. January 1, Year 5 Had the equipment completely overhauled at a cost of $7,250. The overhaul was estimated to extend the total life to seven years. The salvage value did not change. October 1, Year 6 Received and accepted an offer of $15,300 for the equipment. Required a. Use a horizontal statements model to show the net effects of these transactions on the elements of the financial statements. The first event is recorded as an example. b. Determine the amount of depreciation expense to be reported on the income statements for Year 1 through Year 6. c. Determine the book value (cost - accumulated depreciation) Morris will report on the balance sheets at the end of Year 1 through Year 5. d. Determine the amount of the gain or loss Morris will report on the disposal of the equipment on October 1, Year 6. Complete this question by entering your answers in the tabs below. Use a horizontal statements model to show the net effects of these transactions on the elements of the financial statements. The first event is recorded as an example. Note: Use + for increase, - for decrease, and leave blank for no effect. In the Statement of Cash Flows column, use the initials OA to designate operating activity, IA for investing activity and FA for financing activity. Not all cells require input. Complete this question by entering your answers in the tabs below. Determine the amount of depreciation expense to be reported on the income statements for Year 1 through Year 6. Note: Round your answers to nearest dollar amount. Complete this question by entering your answers in the tabs below. Determine the book value (cost - accumulated depreciation) Morris will report on the balance sheets at the end of Year 1 through Year 5. Note: Round intermediate calculations and final answers to nearest dollar amount. Complete this question by entering your answers in the tabs below. Determine the amount of the gain or loss Morris will report on the disposal of the equipment on October 1, Year 6. Note: Round intermediate calculations and final answer to nearest dollar amount. Loss amount should be indicated with a minus sign
