Future Foundations purchased equipment on January 1, 2019, for $50,000, with an estimated useful life of 5 years and an estimated residual value of $5,000. The company uses the straight-line method of depreciation. On July 1, 2021, the equipment was sold for $17,500 cash.
Prepare journal entries for the following:A) Depreciation expense for 2019;B) Depreciation expense for 2020; andC) Sale of the equipment in 2021.

What will be an ideal response?


A)Depreciation Expense (($50,000 ? $5,000) / 5 years)9,000   Accumulated Depreciation 9,000      B)Depreciation Expense9,000         Accumulated Depreciation9,000    C)Cash17,500  Accumulated Depreciation ($9,000 + $9,000 + $4,500)22,500  Loss on disposal of plant assets ($17,500 - $27,500 Book Value)10,000         Equipment 50,000

Business

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