A Company Purchased and Installed Equipment on January 1 at a Total

Essay

A company purchased and installed equipment on January 1 at a total cost of $72,000.Straight-line depreciation was calculated based on the assumption of a five-year life and no salvage value.The equipment was disposed of on July 1 of the fourth year.The company uses the calendar year.
1.Prepare the general journal entry to update depreciation to July 1 in the fourth year.
2.Prepare the general journal entry to record the disposal of the equipment under each of these three independent situations:
a.The equipment was sold for $22,000 cash.
b.The equipment was sold for $15,000 cash.
c.The equipment was totally destroyed in a fire and the insurance company settled the claim for $18,000 cash.