question 4 of 8 here are selected 2027 transactions of pronghorn corporation. jan. 1 retired a piece of…

question 4 of 8 here are selected 2027 transactions of pronghorn corporation. jan. 1 retired a piece of machinery that was purchased on january 1, 2017. the machine cost $62,000 and had a useful life of 10 years with no salvage value. june 30 sold a computer that was purchased on january 1, 2025. the computer cost $35,400 and had a useful life of 4 years with no salvage value. the computer was sold for $5,600 cash. dec. 31 sold a delivery truck for $9,200 cash. the truck cost $25,000 when it was purchased on january 1, 2024, and was depreciated based on a 5 - year useful life with a $3,700 salvage value. prepare a tabular summary to record all transactions described on the above dates. update depreciation on assets disposed of, where applicable. pronghorn corporation uses straight - line depreciation. (if a transaction causes a decrease in assets, liabilities or stockholders equity, place a negative sign for parentheses) in front of the amount entered for the particular asset, liability or equity item that was reduced.) assets = liabilities + stockholders equity cash + equipment - accum. depr. - equip. = common stock + revenue - expense retained earnings jan. 1 $ june 30 dec. 31

question 4 of 8 here are selected 2027 transactions of pronghorn corporation. jan. 1 retired a piece of machinery that was purchased on january 1, 2017. the machine cost $62,000 and had a useful life of 10 years with no salvage value. june 30 sold a computer that was purchased on january 1, 2025. the computer cost $35,400 and had a useful life of 4 years with no salvage value. the computer was sold for $5,600 cash. dec. 31 sold a delivery truck for $9,200 cash. the truck cost $25,000 when it was purchased on january 1, 2024, and was depreciated based on a 5 - year useful life with a $3,700 salvage value. prepare a tabular summary to record all transactions described on the above dates. update depreciation on assets disposed of, where applicable. pronghorn corporation uses straight - line depreciation. (if a transaction causes a decrease in assets, liabilities or stockholders equity, place a negative sign for parentheses) in front of the amount entered for the particular asset, liability or equity item that was reduced.) assets = liabilities + stockholders equity cash + equipment - accum. depr. - equip. = common stock + revenue - expense retained earnings jan. 1 $ june 30 dec. 31

Answer

Explanation:

Step1: Calculate depreciation for machinery on Jan 1

The machinery was purchased for $62,000 with a 10 - year useful life and no salvage value. By straight - line depreciation, the annual depreciation is $\frac{62000}{10}=6200$. From Jan 1, 2017 to Jan 1, 2027 is 10 years. The accumulated depreciation is $6200\times10 = 62000$. The equipment account is decreased by $62000$ and the accumulated depreciation - equipment is decreased by $62000$. There is no cash flow, no impact on liabilities, common stock, revenue. The expense (depreciation) is not relevant as it is already accounted for over the years.

Date Cash Equipment Accum. Depr. - Equip. Liabilities Common Stock Revenue Expense Retained Earnings
Jan 1 $0$ -$62000$ -$62000$ $0$ $0$ $0$ $0$ $0$

Step2: Calculate depreciation for computer on June 30

The computer cost $35,400$ with a 4 - year useful life and no salvage value. The annual depreciation is $\frac{35400}{4}=8850$. From Jan 1, 2025 to June 30, 2027 is $2.5$ years. The accumulated depreciation is $8850\times2.5 = 22125$. The equipment account is decreased by $35400$, the accumulated depreciation - equipment is decreased by $22125$, and there is a cash inflow of $5600$. The loss on disposal is $35400 - 22125-5600=7675$, which is an expense.

Date Cash Equipment Accum. Depr. - Equip. Liabilities Common Stock Revenue Expense Retained Earnings
June 30 $5600$ -$35400$ -$22125$ $0$ $0$ $0$ $7675$ -$7675$

Step3: Calculate depreciation for delivery truck on Dec 31

The delivery truck cost $25,000$ with a 5 - year useful life and a $3700$ salvage value. The annual depreciation is $\frac{25000 - 3700}{5}=4260$. From Jan 1, 2024 to Dec 31, 2027 is 4 years. The accumulated depreciation is $4260\times4 = 17040$. The equipment account is decreased by $25000$, the accumulated depreciation - equipment is decreased by $17040$, and there is a cash inflow of $9200$. The gain on disposal is $9200-(25000 - 17040)=1240$, which is a revenue.

Date Cash Equipment Accum. Depr. - Equip. Liabilities Common Stock Revenue Expense Retained Earnings
Dec 31 $9200$ -$25000$ -$17040$ $0$ $0$ $1240$ $0$ $1240$

Answer:

Date Cash Equipment Accum. Depr. - Equip. Liabilities Common Stock Revenue Expense Retained Earnings
Jan 1 $0$ -$62000$ -$62000$ $0$ $0$ $0$ $0$ $0$
June 30 $5600$ -$35400$ -$22125$ $0$ $0$ $0$ $7675$ -$7675$
Dec 31 $9200$ -$25000$ -$17040$ $0$ $0$ $1240$ $0$ $1240$