Question

Sale of Plant Asset Shannon Company has a equipment that originally cost $68,000. Depreciation has been recorded for six years using the straight-line method, with a $9,000 estimated salvage value at the end of an expected eight-year life. After recording depreciation at the end of six years, Shannon sells the equipment. Prepare the journal entry to record the equipment's sale for (Round to the nearest dollar): a. $30,000 cash b. $23,750 cash c. $21,000 cash General Journal Description Date Debit Credit Cash Equipment To record sale of equipment. Cash b. To record sale of equipment. Cash Accumulated Depreciation - Equipment To record sale of equipment.

Answer 1

Cost of Equipment - $68000 Salvage walese - $9000 4. • Журет .. > Straight line Depreciation - Cost - Salvage value :: 33 ms 68000-9000 59000 = $7375 → Accumulated Depreciation at the end of 6th year = 7375 x6 = $44.250 Book value at the time of sale 35 68000 -44250 = $ $ 23750

18 If sold for $30,000:- There is a gain of $6250( ie: 30000 - 23750) (b) If sold for $23750:- . There is no gain/no loss and (e) DJ sold for $ 21000:- 1. There is a loss of $2750 Journal Entries: a) Cash $30,000 Accumulated Depreciation 44250 Equipment 0 $68000 Profit on sale 6250 (To record sale of equipment) . . . for gain ! b) Cash · Accumulated Depreciation Equipment . (To record sale of a 23750 44250 68000 i equipment)

(C) -Cash ; 21000 loss on sale i 2750 Accumulated Depreciation 44250 Equipment is (To record sale equipment for loss). 68000 O