Question

E9.9 (LO 3), AP Thieu Co. has delivery equipment that cost $50,000 and has been depreciated $24,000.

Journalize transactions related to disposals of plant assets.

Instructions

Record entries for the disposal under the following assumptions.

a. It was scrapped as having no value.

b. It was sold for $37,000.

c. It was sold for $20,000.

E9.12 (LO 1, 2, 3), AN Shown below are the T-accounts relating to equipment that was purchased for cash by a company on the first day of the current year. The equipment was depreciated on a straight-line basis with an estimated useful life of 10 years and a salvage value of $100. Part of the equipment was sold on the last day of the current year for cash proceeds.

Record equipment transactions and determine missing amounts.

Cash

Equipment

Accumulated Depreciation—Equipment

Jan. 1 (a)

Jan. 1

1,100

Dec. 31

100

Dec. 31

450

Dec. 31

440

Dec. 31

40

Depreciation Expense			Gain on Disposal of Plant Assets
Dec. 31 (b)				Dec. 31 (c)

Instructions

Prepare the journal entries to record the following and derive the missing amounts:

a. Purchase of equipment on January 1. What was the cash paid?

b. Depreciation recorded on December 31. What was the depreciation expense?

c. Sale of part of the equipment on December 31. What was the gain on disposal?

Answer 1

E9.9

A	Accumulated Depreciation - Equipment	24,000
	Loss on disposal	26,000
	Equipment		50,000
B	Cash	37,000
	Accumulated Depreciation - Equipment	24,000
	Gain on sale of equipment		11,000
	Equipment		50,000
C	Cash	20,000
	Accumulated Depreciation - Equipment	24,000
	Loss on sale of equipment	6,000
	Equipment		50,000