Question 1 Equipment was acquired at the beginning of the year at a cost of $352,795 The equipment was depreciated using the straight line method based on an estimated useful life of 12 years and an estimated residual value of $43,195 Required A What was the depreciation for the first year B Assuming the equipment was sold at the end of the tenth year for $87,300, determine the gain or loss on the sale of the equipment C Journalize the entry to record the sale Refer to the Chart of Accounts for exact wording of account titles A What was the depreciation for the first year B Assuming the equipment was sold at the end of the tenth year for $87,300, determine the gain or loss on the sale of the equipment CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Supplies 119 Prepaid Insurance 120 Land 123 Delivery Truck 124 Accumulated Depreciation Delivery Truck 125 Equipment 126 Accumulated Depreciation Equipment 130 Mineral Rights 131 Accumulated Depletion 132 Goodwill 133 Patents LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Owner, Capital 311 Owner, Drawing 312 Income Summary REVENUE 410 Sales 610 Interest Revenue 620 Gain on Sale of Delivery Truck 621 Gain on Sale of Equipment EXPENSES 510 Cost of Merchandise Sold 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense Delivery Truck 523 Delivery Expense 524 Repairs and Maintenance Expense 529 Selling Expenses 531 Rent Expense 532 Depreciation Expense Equipment 533 Depletion Expense 534 Amortization Expense Patents 535 Insurance Expense 536 Supplies Expense 539 Miscellaneous Expense 710 Interest Expense 720 Loss on Sale of Delivery Truck 721 Loss on Sale of Equipment C Journalize the entry to record the sale Refer to the Chart of Accounts for exact wording of account titles PAGE 1 JOURNAL DATE DESCRIPTION POST REF DEBIT CREDIT 1 2 3 4

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Question 1 Equipment was acquired at the beginning of the year at a cost of $352,795. The equipment was depreciated using the straight-line method based

Question 1

Equipment was acquired at the beginning of the year at a cost of $352,795. The equipment was depreciated using the straight-line method based on an estimated useful life of 12 years and an estimated residual value of $43,195.

	Required:
A.	What was the depreciation for the first year?
B.	Assuming the equipment was sold at the end of the tenth year for $87,300, determine the gain or loss on the sale of the equipment.
C.	Journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles.

A. What was the depreciation for the first year?

B. Assuming the equipment was sold at the end of the tenth year for $87,300, determine the gain or loss on the sale of the equipment.

CHART OF ACCOUNTS

General Ledger

	ASSETS
110	Cash
111	Petty Cash
112	Accounts Receivable
114	Interest Receivable
115	Notes Receivable
116	Merchandise Inventory
117	Supplies
119	Prepaid Insurance
120	Land
123	Delivery Truck
124	Accumulated Depreciation-Delivery Truck
125	Equipment
126	Accumulated Depreciation-Equipment
130	Mineral Rights
131	Accumulated Depletion
132	Goodwill
133	Patents

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	Owner, Capital
311	Owner, Drawing
312	Income Summary

	REVENUE
410	Sales
610	Interest Revenue
620	Gain on Sale of Delivery Truck
621	Gain on Sale of Equipment

	EXPENSES
510	Cost of Merchandise Sold
520	Salaries Expense
521	Advertising Expense
522	Depreciation Expense-Delivery Truck
523	Delivery Expense
524	Repairs and Maintenance Expense
529	Selling Expenses
531	Rent Expense
532	Depreciation Expense-Equipment
533	Depletion Expense
534	Amortization Expense-Patents
535	Insurance Expense
536	Supplies Expense
539	Miscellaneous Expense
710	Interest Expense
720	Loss on Sale of Delivery Truck
721	Loss on Sale of Equipment