Presented here are selected transactions for Sheridan Limited for 2024. Sheridan uses straight-line depreciation and records adjusting entries annually. Jan. 1 Sold a delivery truck for \( \$ 16,310 \) cash. The truck cost \( \$ 57,930 \) when it was purchased on January 1, 2021, and was depreciated based on a four-year useful life with a \( \$ 6,310 \) residual value. Sept. 1 Sold computers that were purchased on January 1, 2022. They cost \( \$ 10,476 \) and had a useful life of three years with no residual value. The computers were sold for \( \$ 470 \) cash. Dec. 30 Retired equipment that was purchased on January 1, 2015. The equipment cost \( \$ 152,000 \) and had a useful life of 10 years with no residual value. No proceeds were received. \( \mid-208 \) 2

To analyze the transactions for Sheridan Limited in 2024, we need to calculate the depreciation for each asset involved in the transactions and determine the gain or loss on the sale or retirement of each asset. Let's break this down step by step. ### 1. Delivery Truck - **Cost**: \( \$ 57,930 \) - **Useful Life**: 4 years - **Residual Value**: \( \$ 6,310 \) - **Depreciation Expense Calculation**: \[ \text{Depreciation Expense} = \frac{\text{Cost} - \text{Residual Value}}{\text{Useful Life}} = \frac{57,930 - 6,310}{4} \] - **Total Depreciation for 2021 to 2023 (3 years)**: \[ \text{Total Depreciation} = \text{Depreciation Expense} \times 3 \] - **Book Value at Sale (January 1, 2024)**: \[ \text{Book Value} = \text{Cost} - \text{Total Depreciation} \] - **Gain/Loss on Sale**: \[ \text{Gain/Loss} = \text{Sale Price} - \text{Book Value} \] ### 2. Computers - **Cost**: \( \$ 10,476 \) - **Useful Life**: 3 years - **Residual Value**: \( \$ 0 \) - **Depreciation Expense Calculation**: \[ \text{Depreciation Expense} = \frac{\text{Cost} - \text{Residual Value}}{\text{Useful Life}} = \frac{10,476 - 0}{3} \] - **Total Depreciation for 2022 to 2024 (2 years)**: \[ \text{Total Depreciation} = \text{Depreciation Expense} \times 2 \] - **Book Value at Sale (September 1, 2024)**: \[ \text{Book Value} = \text{Cost} - \text{Total Depreciation} \] - **Gain/Loss on Sale**: \[ \text{Gain/Loss} = \text{Sale Price} - \text{Book Value} \] ### 3. Retired Equipment - **Cost**: \( \$ 152,000 \) - **Useful Life**: 10 years - **Residual Value**: \( \$ 0 \) - **Depreciation Expense Calculation**: \[ \text{Depreciation Expense} = \frac{\text{Cost} - \text{Residual Value}}{\text{Useful Life}} = \frac{152,000 - 0}{10} \] - **Total Depreciation for 2015 to 2024 (9 years)**: \[ \text{Total Depreciation} = \text{Depreciation Expense} \times 9 \] - **Book Value at Retirement (December 30, 2024)**: \[ \text{Book Value} = \text{Cost} - \text{Total Depreciation} \] - **Loss on Retirement**: \[ \text{Loss} = \text{Book Value} - \text{Proceeds} \quad (\text{Proceeds} = 0) \] Now, let's perform the calculations for each asset. ### Calculations #### Delivery Truck 1. **Depreciation Expense**: \[ \text{Depreciation Expense} = \frac{57,930 - 6,310}{4} = \frac{51,620}{4} = 12,905 \] 2. **Total Depreciation (3 years)**: \[ \text{Total Depreciation} = 12,905 \times 3 = 38,715 \] 3. **Book Value**: \[ \text{Book Value} = 57,930 - 38,715 = 19,215 \] 4. **Gain/Loss on Sale**: \[ \text{Gain/Loss} = 16,310 - 19,215 = -2,905 \quad (\text{Loss}) \] #### Computers 1. **Depreciation Expense**: \[ \text{Depreciation Expense} = \frac{10,476 - 0}{3} = 3,492 \] 2. **Total Depreciation (2 years)**: \[ \text{Total Depreciation} = 3,492 \times 2 = 6,984 \] 3. **Book Value**: \[ \text{Book Value} = 10,476 - 6,984 = 3,492 \] 4. **Gain/Loss on Sale**: \[ \text{Gain/Loss} = 470 - 3,492 = -3,022 \quad (\text{Loss}) \] #### Retired Equipment 1. **Depreciation Expense**: \[ \text{Depreciation Expense} = \frac{152,000 - 0}{10} = 15,200 \] 2. **Total Depreciation (9 years)**: \[ \text{Total Depreciation} = 15,200 \times 9 = 136,800 \] 3. **Book Value**: \[ \text{Book Value} = 152,000 - 136,800 = 15,200 \] 4. **Loss on Retirement**: \[ \text{Loss} = 15,200 - 0 = 15,200 \] ### Summary of Results - **Delivery Truck**: Loss of \( \$ 2,905 \) - **Computers**: Loss of \( \$ 3,022 \) - **Retired Equipment**: Loss of \( \$ 15,200 \) These calculations provide a clear view of the financial impact of the transactions for Sheridan Limited in 2024.