Exercise 9-10 Pryce Company owns equipment that cost $65,000 when purchased on J

Question

Exercise 9-10 Pryce Company owns equipment that cost $65,000 when purchased on January 1, 2014. It has been depreciated using the straight-line method based on an estimated salvage value of $5,000 and an estimated useful life of 5 years. Prepare Pryce Company's journal entries to record the sale of the equipment in these four independent situations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to o decimal places, e.g.125. If no entry is required, select "No Entry for the account titles and enter 0 for the amounts.) (a) Sold for $31,000 on January 1, 2017. (b) Sold for $31,000 on May 1, 2017. (c) Sold for $11,000 on January 1, 2017 (d) Sold for $11,000 on October 1, 2017. No. Account Titles and Explanation Debit Credit (To record depreciation) All Rights Reserved. A Division of John Wiley & Sons. In

Explanation / Answer

Depreciation expense = (65000-5000)/5 12000 No Date Account titles and explanations Debit Credit a) 1/1/2017 Cash 31,000 Accumulated depreciaiton (12000*3) 36,000 Gain on sale of Equipment 2,000 Equipment 65,000 b) 5/1/2017 Depreciation expense 4000 Accumulated depreciation (12000/12)*4 4,000 Cash 31,000 Accumulated depreciaiton (36000+4000) 40000 Gain on sale of Equipment 6,000 Equipment 65,000 c) 1/1/2017 Cash 11,000 Accumulated depreciaiton (12000*3) 36,000 Loss on sale of Equipment 18,000 Equipment 65,000 d) 10/1/2017 Depreciation expense 9000 Accumulated depreciation (12000/12)*9 9,000 Cash 11,000 Accumulated depreciaiton (36000+9000) 45,000 loss on sale of Equipment 9,000 Equipment 65,000

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