Equipment acquired on January $8$ at a cost of $$113,950$ has an estimated useful life of $12$ years, has an estimated residual value of $$7,150,$ and is depreciated by the straight$-$line method.

Required:

a$.$ What was the book value of the equipment at December $31$ the end of the fourth year?

b$.$ Assuming that the equipment was sold on April $1$ of the fifth year for $$69,655,$ journalize the entries to record $(1)$ depreciation for the three months until the sale date and $(2)$ the sale of the equipment. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Round your answer to the nearest whole dollar. 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's Capital

$311$ Owner's Drawing

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 b$.$ Assuming that the equipment was sold on April $1$ of the fifth year for $$69,655,$ journalize the entries to record the following $($Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Round your answer to the nearest whole dollar.$)$:

$1.$ Depreciation for the three months until the sale date

How does grading work?

PAGE $1$

JOURNALACCOUNTING EQUATION

Score: $25/25$

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

Apr. $1$

Depreciation Expense$-$Equipment

$2,225\mathrm{.}00$

$$

Accumulated Depreciation$-$Equipment

$2,225\mathrm{.}00$

$$

Points:

$5/5$

$2.$ The sale of the equipment

How does grading work?

PAGE $2$

JOURNALACCOUNTING EQUATION

Score: $43/49$

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

Apr. $01$

Cash

$98,510\mathrm{.}00$

$$

Accumulated Depreciation$-$Equipment

$766\mathrm{.}00$

$34,000\mathrm{.}00$

$$

Loss on Sale of Equipment

$6,470\mathrm{.}00$

$$

Equipment

$113,950\mathrm{.}00$

$$

Points:

$7\mathrm{.}9/9$

Check My Work

$1.$ The depreciation account of the fixed asset being sold or discarded needs to be updated to reflect the months of use in the year it is being discarded or sold. The straight$-$line method of depreciation calculates the amount of depreciation to be recognized each year.

$2.$ Be sure to record the selling price of the fixed asset. If the company no longer has the fixed asset what account$($s$)$ would need to be eliminated? Was there a gain or a loss on the sale?