The following are some transactions of Surendal Company for 2014. Surendal Company uses straight-line depreciation and has a December 31 year end. Jan. 2 Scrapped a piece of equipment that originally cost $8,000 and was fully depreciated. Apr. 1 Retired a piece of equipment that was purchased on January 1, 2005, for $45,000. The equipment had an expected useful life of 10 years with no residual value. July 30 Sold equipment for $1,100 cash. The equipment was purchased on January 3, 2012, for $12,600 and was depreciated over an expected useful life of three years with no residual value. Nov. 1 Traded in an old vehicle for a new vehicle, receiving a $10,000 trade-in allowance and paying $36,000 cash. The old vehicle had been purchased on November 1, 2007, at a cost of $35,000. The estimated useful life was eight years and the estimated residual value was $5,000. The fair value of the old vehicle was $7,000 on November 1, 2014. Instructions (a) For each of these disposals, prepare a journal entry to record depreciation from January 1, 2014, to the date of disposal, if required. (b) For each these disposals, indicate if the disposal has increased (+) or decreased (-) Cash, Equipment, Accumulated Depreciation, total property, plant, and equipment (PP&E), and profit, and by how much. If the item is not changed, write “NE” to indicate there is no effect. Use the following format, in which the first one has been done for you as an example. (c) Record the disposals.
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