On January 2, 2004 Cunningham Corporation purchased a new piece of equipment for $60,000 cash. Cunningham uses straight line depreciation and estimates the useful life of the equipment at 5 years with a residual value of $10,000.

a. Prepare the journal entry to record the purchase of the asset.
b. Prepare the journal entries to record the depreciation for the first year of life of the asset.

a) (db)Equipment 60,000
(cr)Cash 60,000
To record purchase assets

b) (60,000 - 10,000) : 5 = 10,000

(db) Amortization expense 10,000
(cr) Accumulated amortization 10,000
To record current year amortization