Tringle Inc. recorded the following transactions over the life of a piece of equipment purchased in 2016:
Jan. 1, 2016 Purchased the equipment for $38,000 cash. The equipment is estimated to have a five-year life and $3,000 salvage value and was to be depreciated using the straight-line method.
Dec. 31, 2016 Recorded depreciation expense for 2016.
May 5, 2017 Undertook routine repairs costing $900.
Dec. 31, 2017 Recorded depreciation expense for 2017.
Jan. 1, 2018 Made an adjustment costing $4,000 to the equipment. It improved the quality of the output but did not affect the life and salvage value estimates.
Dec. 31, 2018 Recorded depreciation expense for 2018.
Mar. 1, 2019 Incurred $410 cost to oil and clean the equipment.
Dec. 31, 2019 Recorded depreciation expense for 2019.
Jan. 1, 2020 Had the equipment completely overhauled at a cost of $9,000. The overhaul was estimated to e x tend the total life to seven years and revised the salvage value to $2,500.
Dec. 31, 2020 Recorded depreciation expense for 2020.
July 1, 2021 Sold the equipment for $8,500 cash.
a. Use a horizontal statements model like the following one to show the effects of these transactions on the elements of the financial statements. Use + for increase, – for decrease, and NA for not affected. The first event is recorded as an example.
b. Determine the amount of depreciation expense Tringle will report on the income statements for the years 2016 through 2020.
c. Determine the book value (cost – accumulated depreciation) Tringle will r e port on the balance sheets at the end of the years 2016 through 2020.
d. Determine the amount of the gain or loss Tringle will report on the disposal of the equipment on July 1, 2021.
e. Prepare the journal entry for the disposal of the equipment on July 1, 2021.