On Ist January, 1993, lobo Company purchased equipment fo...
On Ist January, 1993, lobo Company purchased equipment for N18,000. it uses straight-line depreciation with an estimates eight-year useful life and a N2,000 salvage value. On 31st December, 1996, it sells the equipment for N8000. In recording this sales, it should reflect?
N10,000 loss
N2,000 loss
N4,000 loss
N8,000 gain
Correct answer is C
equipment price = 18000
salvage value after 8 years useful life = 2000
If in 1996 ( 3 years later) it is sold for 8000, hence we have
18000 - (2000 x 3 yrs = 6000) = 12000
12000 - 8000 = 4000
This means that the equipment was supposed to have been sold for 12,000 after 3years of usage instead it was sold for 8,000. This shows a N4000 loss
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\(\begin{array}{c|c} & D\\ \hline \text{Purchase of raw materials} & 236,500\\ \text{Returns...