Depreciation, depletion, and amortization:
Cutter Enterprises purchased equipment for $81,000 on January 1, 2024. The equipment is expected to have a five-year life and a residual value of $7,800.
Using the double-declining-balance method, depreciation for 2025 would be:
is expected to have a five-year life and a residual value of $6,000.
Using the sum-of-the-years’-digits method, depreciation for 2025 and book value on December 31, 2025, would be:
Note: Do not round the depreciation rate per year.
Equipment was acquired on January 1, 2024, for $26,000 with an estimated four-year life and $3,000 residual value. The company uses straight-line depreciation. Which of the following entries would be used to record the sale of the equipment for $9,000 on December 31, 2026?
Multiple Choice
| Account Title | Debit | Credit |
| Cash | $ 9,000 | |
| Equipment | $ 5,750 | |
| Gain | $ 3,250 |
| Account Title | Debit | Credit |
| Cash | $ 9,000 | |
| Equipment | $ 8,750 | |
| Gain | $ 250 |
| Account Title | Debit | Credit |
| Cash | $ 9,000 | |
| Accumulated depreciation | $ 11,500 | |
| Loss | $ 5,500 | |
| Equipment | $ 26,000 |
| Account Title | Debit | Credit |
| Cash | $ 9,000 | |
| Accumulated depreciation | $ 17,250 | |
| Equipment | $ 26,000 | |
| Gain | $ 250 |
On September 30, 2024, Sternberg Company sold office equipment for $12,000. The equipment was purchased on March 31, 2021, for $24,000. The asset was being depreciated over a five-year life using the straight-line method, with depreciation based on months in service. No residual value was anticipated.
Required:
Prepare the journal entries to record 2024 depreciation and the sale of the equipment.
Note: If no entry is required for a transaction/event, select “No journal entry required” in the first account field.