Ace Corporation purchased equipment on January 1, 2011 for the following: Purchase price $100,000 Sales tax 6,000 Installation 3,000 Delivery 1,000 Total $110,000 Ace estimates that it will use the equipment for six years and its residual value will be $20,000. Ace uses the straight line method of depreciation and its accounting year end is December 31. On October 31, 2012 Ace sells the equipment for $75,000.
Required: Prepare all necessary journal entries and adjusting journal entries for Ace for 2011 and 2012.