Sale of Asset

Equipment acquired on January 9, 20Y3, at a cost of $705,000, has an estimated useful life of 19 years, an estimatedresidual valueof $155,100, and is depreciated by thestraight-line method.

a.What was thebook valueof the equipment at the end of the fifth year, December 31, 20Y7? Round your interim calculations and final answer to the nearest dollar.

$

For decreases in accounts or outflows of cash, enter your answers as negative numbers. Round annual depreciation to the nearest dollar and use this amount in your follow-on calculations. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank.

b1.Assuming that the equipment was sold on July 1, 20Y8, for $352,500, illustrate the effects on the accounts and financial statement ofdepreciationfor the six months until the sale date.

Statement of Cash FlowsBalance SheetIncome StatementAssets=Liabilities+Stockholders' Equity-Accumulated depreciation - equipment

+No effect

=No effect

+Retained earnings

July 1.Statement of Cash FlowsIncome StatementNo effect

Depreciation expense

b2.Assuming that the equipment was sold on July 1, 20Y8, for $352,500, illustrate the effects on the accounts and financial statement of the sale of the equipment.

Statement of Cash FlowsBalance SheetIncome StatementAssets=Liabilities+Stockholders' EquityCash

+Equipment

-Accumulated depreciation - equipment

=No effect

Retained earnings

July 1.Statement of Cash FlowsIncome StatementInvesting