Accounting format

Plant Assets"  

E9-9 Shown below are the T‐accounts relating to equipment that was purchased for cash by a company on the first day of the current year. The equipment was depreciated on a straight‐line basis with an estimated useful life of 10 years and a salvage value of $100. Part of the equipment was sold on the last day of the current year for cash proceeds.

Cash                                       Equipment                                        Accumulated Depreciation-Equipment

                   Jan . 1 (a)                Jan. 1    1,100                                                                                          Dec. 31                    100       

Dec. 31  450                                                               Dec.    31      440                     Dec      31            40         31                     55

Depreciation Expense                   Gain on Disposal of Plant Assets

Dec.   31 (b)                                                                                        Dec. 31 (c)

Instructions

Prepare the journal entries to record the following and derive the missing amounts:

(a) Purchase of equipment on January 1. What was the cash paid?

(b) Depreciation recorded on December 31. What was the depreciation expense?

(c) Sale of part of the equipment on December 31. What was the gain on disposal?