At the beginning of the current year, Andy Company has equipment that originally cost $50,000, has...
At the beginning of the current year, Andy Company has equipment that originally cost $50,000, has $35,000 accumulated depreciation, and is being depreciated at $5,000 per year. Andy sells this equipment for $11,500 at the end of the current year.
Required:
|
Prepare journal entries to record both the current year’s depreciation and the disposal of the equipment. |
Homework Answers
Answer- Journal entry for current year depreciation-
| S.no. | Accounts Titles & Explanation | Debit | Credit |
| $ | $ | ||
| 1 | Depreciation expense | 5000 | |
| Equipment | 5000 | ||
| (Being depreciation recorded for the current month) |
Journal entry for disposal of equipment-
| S.no. | Accounts Titles & Explanation | Debit | Credit |
| $ | $ | ||
| 1 | Cash | 11500 | |
| Equipment | 10000 | ||
| Gain on sale of equipment | 1500 | ||
| (Being entry made for equipment sold) |
Book value of equipment at the end of current year = Original cost of equipment-Accumulated depreciation- Current year depreciation
= $50000-$35000-$5000
= $10000
Gain on sale of equipment = Sale value of equipment- Book value of equipment at the end of current year
= $11500-$10000
= $1500
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