Howarth Manufacturing Company purchased a lathe on June 30,2014, at a cost of $80,000. The residual value of the lathe wasestimated to be $5,000 at the end of a five-year life. The lathewas sold on March 31, 2018, for $17,000. Howarth uses thestraight-line depreciation method for all of its plant andequipment. Partial-year depreciation is calculated based on thenumber of months the asset is in service.
1.Prepare a schedule to calculate the gain or loss on thesale.
2. Prepare the journal entry to record the sale.
3. Assuming that Howarth had instead used thesum-of-the-years'-digits depreciation method, prepare the journalentry to record the sale.
