On January 1, Lex Co. Bought equipment for $90,000. In addition to the purchase price, Lex paid
Question:
On January 1, Lex Co. Bought equipment for $90,000. In addition to the purchase price, Lex paid $6,000 in sales tax, $1,600 in shipping costs, $3,000 in staff training costs, and $2,400 in setup costs. The equipment has an estimated salvage value of $10,000 and a total estimated useful life of 10 years. Lex uses the straight-line method of depreciation and records depreciation expense annually.
On January 1, Year 2, the estimated useful life was revised to a total of 5 years from the date of purchase, and the estimated scrap value was reduced to $5,000. The change in estimated useful life was a result of increased production.
The equipment was sold for $55,000 on July 1, Year 3. Record the appropriate log entry for the following situations.
To prepare each required journal entry:
1. Prepare the journal entry to record the depreciation expense for Year 2.
2. Prepare the journal entry to record Year 3 sales and necessary adjustments.
Expert Answer:
Cost of equipment Purchase price Sales tax Shipping costs Training costs Installation c... View the full answer
