http://img.photobucket.com/albums/v6...xx/acct1-2.jpg
http://img.photobucket.com/albums/v6...xx/acct2-1.jpg

I've attempted this part of the problem with "?" at least a 100 times.. Can someone please explain to me what I'm doing wrong.

You did so well on everything else I'm a bit surprised this was messed up. First, it doesn't balance, which is a no-no right there.

You've got the equipment updated to 40,140,000, (which is correct) and it's all straight-line for 10 years with no salvage. It's fairly straight-forward. What did you use to come up with your answer, and why are the debits & credits different?

(P.S. See the correct answer below. Apologies. I was trying follow this on the screen and I usually write stuff down so I don't miss something.)

First of all, the entry is not balancing.
The depreciation expense that should be recorded for the equipment is as follows:

- You should record depreciation expense related to the equipment purchased on July 1(1,300,000/10)130,000 yearly depreciation (130,000/12*6 months from july1 to December 31)= 65,000
- After all the transactions mentioned the cost of the equipment will be as follows:
B.balance 40,000,000
Minus: 660,000
Minus: 500,000
The balance that should be depreciated 38,840,000.(Note that I did not add the 1,300,000 newly purchased equipment because I calculated the depreciation related to it above) We divide this amount by 10 years to get the depreciation expense for the old equipment(38,840,000/10)= 3,884,000
then we add to this amount the depreciation expense related to the purchased equipment 65,000. So we will get 3.949,000and the entry will be:
Dr. depreciation expense 3,949,000
Cr. Accumulated Depr. 3,949,000