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Prepare all necessary journal entries for the year ended

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Question - Jijang Excavations Ltd. (JEL) operates specialized equipment for installing natural gas pipelines. JEL, which has a December 31 year end, began 2020 with a single piece of equipment that had been purchased on January 1, 2017, for $27,000 and a truck that had been purchased on January 1, 2019, for $60,000. When the equipment was purchased, JEL's management had estimated that the equipment would have a residual value of $3,000 and a useful life of six years. When the truck was purchased, management determined that it would have a useful life of four years and a residual value of $6,000.

On March 31, 2020, JEL sold this piece of equipment for $22,000 cash. On April 1, 2020, JEL purchased replacement equipment with double the capacity for $46,600 cash. JEL's management determined that this equipment would have a useful life of six years and a residual value of $7,000.

Prepare all necessary journal entries for the year ended December 31, 2020. Assume that JEL uses the straight-line depreciation method for its equipment and the double-diminishing-balance method for its trucks.

Reference no: EM132493930

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