Question

1 and 2

t THFEE Different Sale Prices Marriott International is a worldwide operator and franchiser of hotels and related lodging facilities totaling nearly $1.5 billion in net property and equipment. Assume that Marriott replaced furniture that had been used in the business for five years. The records of the company reflected the following regard- ing the sale of the existing furniture: E8-17 LO8-5 Furniture (cost) Accumulated depreciation $8,000,000 7.700,000 Required: 1. Give the journal entry for the disposal of the furniture, assuming that it was sold for a. $300,000 cash b. $900,000 cash c. $100,000 cash 2. Based on the three preceding situations, explain the effects of the disposal of an asset.

Answer 1

JOURNAL account titles and explanation serial no debit credit la $ 300,000 $ 7,700,000 cash accumulated depreciation furniture (sale of furniture recorded) $ 8,000,000 1b $ 900,000 $ 7,700,000 cash accumulated depreciation furniture gain on sale of furniture (sale of furniture recorded) $ 8,000,000 $ 600,000 1c cash accumulated depreciation loss on sale of furniture furniture (sale of furniture recorded) $ 100,000 $ 7,700,000 $ 200,000 $ 8,000,000 2 the net book value of the furniture on the date of sale was $8,000,000 minus $7,700,000 i.e. $300,000 in case la, the furniture was sold at a price equal to its book value, hence it dosen't resulted in any gain or loss in case 1b, the furniture was sold at a price higher than its book value, hence it resulted in a gain of $600,000 in case 1c, the furniture was sold at a price lower than its book value, hence it resulted in a loss of $200,000

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