On March 31, 2021, the Smorph Company purchased a factory complete with vehicles and equipment. The allocation fo the total purchase price of $1,000,000 to the various types of assets along with estimated useful lives and residual values are as follows:

Asset

Cost

Estimated residual value

Estimated useful life

(in years)

Land

$100,000

N/A

N/A

Building

500,000

None

25

Equipment

240,000

10% of cost

8

Vehicles

160,000

$12,000

8

Total

1,000,000

On June 29,2022, equipment included in the March 31, 2021, purchase that cost $100,000 was sold for $80,000. Smorph uses the straight-line depreciation method for buildings and equipment, and the double-declining-balance method for vehicles. Partial-year depreciation is calculated based on the number of months an asset is in service.

Required:

1.Compute the depreciation expense on the building, equipment, and vehicles for 2021.

2.Prepare the journal entries for 2022 to record:

A)Depreciation on the equipment sold on June 29, 2022, and

B)The sale of the equipment.

3.Compute depreciation expense on the building, remaining equipment, and vehicles for 2022.