Watts co. purchased equipment in 2001 for 90,000 and estimated a $6,000 salvage

Question

Watts co. purchased equipment in 2001 for 90,000 and estimated a $6,000 salvage at the end of the equipment's life. At December 31,2007, there was $58,000 in the Accumulated Depreciation account for this equipment using the straight line method of depreciation. On March 31,2008 the equipment was sold for $24,000. Prepare the appropriate journal entries to remove the equipment from the books of watts co. on March 21,2008. I know how to to find the depreciation expense 90,000-6000/10.
I am stuck on the second half.

Explanation / Answer

Depreciation expense (1 jan - 31 mar 2008) = [(90,000-6,000)/10 ] x (3/12) = 2,100 Dr Depreciation expense 2,100 Cr Accumulated depreciation 2,100 Before sale: In balance sheet: Equipment 90,000 Accumulated dep 58,000+2,100 = 60,100 Net book value = 90,000 - 60,100 = 29,900 < 24,000 (resale price) To aacount for sale: Dr Accumulated deprecitation 60,100 Dr Cash 24,000 Dr Loss on sale of equipment 5,900 Cr Equipment 90,000

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