On January 2, 2009, So Co Vending purchased ve vending machines to place in a high school Each vending machine cost $3,100 and had an estimated six year useful life and $400 salvage value So Co uses the straight line depreciation method On April 1, 2012, the company decided to replace the vending m...

Calculations Cost Salvage Value Depreciable Amount Useful Life ...

On January 2, 2009, So Co Vending purchased ve vending machines to place in a high school.

Question:

On January 2, 2009, So Co Vending purchased ﬁve vending machines to place in a high school. Each vending machine cost $3,100 and had an estimated six-year useful life and $400. So Co uses the straight-line depreciation method. On April 1, 2012, the company decided to replace the vending machines and sold all of them to a single buyer.
Required:
(a) Prepare the journal entry to record the depreciation expense on the vending machines for the ﬁrst three months of 2012.
(b) Determine the book value of the vending machines following the posting of the journal entry prepared in part (a).
(c) Prepare the journal entry to record the sale of the vending machines for $8,000.
(d) Prepare the journal entry to record the sale of the vending machines for $9,300.
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...