Question 6

Sandhill Co. purchased equipment on March 1, 2015, for $97,500 on account. The equipment had an estimated useful life of five years, with a residual value of $5,000. The equipment is disposed of on February 1, 2018. Sandhill Co. uses the diminishing-balance method of depreciation with a 20% rate and calculates depreciation for partial periods to the nearest month. The company has an August 31 year end.

Record the disposal on February 1, 2018, under the following assumptions: (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

1.		It was scrapped with no residual value.
2.		It was sold for $56,070.
3.		It was sold for $46,440.
4.		It was traded for new equipment with a list price of $94,250. Sandhill was given a trade-in allowance of $50,250 on the old equipment and paid the balance in cash. Sandhill determined the old equipments fair value to be $48,590 at the date of the exchange.