PROBLEM 1: Equipment A Equipment B
cost $100,000 $63,000
Accumulated depreciation(1/1) $ 42,000 $36,000
Useful life 8 years 5 years
Depreciation method straight line straight line
Date sold 7/1/12 9/1/12
Sales price $ 39,000 $ 20,000
Journalize all entries required to update deprecition and record thesales of the two assets in 2012.accumulated depreciation includes depreciation recorded through 12/31/11.

Equipment A

Journal Entry - update depreciation

Depreciation expense $6,250 (debit)

Accumulated depreciation $6,250 (credit)

Journal Entry - to record the sale

Accumulated depreciation ($ 42,000 + $6,250) $48,250 (debit)

Cash $ 39,000 (debit)

Profit and Loss $12,750 (debit)

Equipment $100,000 (credit)

Equipment B

Journal Entry - update depreciation

Depreciation expense $6,300 (debit)

Accumulated depreciation $6,300 (credit)

Journal Entry - to record the sale

Accumulated depreciation ($36,000 + $6,300) $42,300 (debit)

Cash $ 20,000 (debit)

Profit and Loss $700 (debit)

Equipment $63,000 (credit)

Explanation:

Straight line method charges a fixed amount of depreciation for the time the asset is in use in the business.

Depreciation Expense = (Cost - Residual Value) / Estimated Useful Life

Equipment A

Depreciation Expense = $100,000 / 8 years

                                     = $12,500

Depreciation Expense for 2012 = $12,500 × 6/12

                                                    = $6,250

Journal Entry - update depreciation

Depreciation expense $6,250 (debit)

Accumulated depreciation $6,250 (credit)

Journal Entry - to record the sale

Accumulated depreciation ($ 42,000 + $6,250) $48,250 (debit)

Cash $ 39,000 (debit)

Profit and Loss $12,750 (debit)

Equipment $100,000 (credit)

Equipment B

Depreciation Expense = $63,000 / 5 years

                                     = $12,600

Depreciation Expense for 2012 = $12,600 × 6/12

                                                    = $6,300

Journal Entry - update depreciation

Depreciation expense $6,300 (debit)

Accumulated depreciation $6,300 (credit)

Journal Entry - to record the sale

Accumulated depreciation ($36,000 + $6,300) $42,300 (debit)

Cash $ 20,000 (debit)

Profit and Loss $700 (debit)

Equipment $63,000 (credit)

what are the options

explanation:

1. c

2. b

3. a

4. c

5. a

6. b

7. c

8. c

9.b

10. d

just took it 100%