Marriott International is a worldwide operator and franchiser of hotels and rela

Question

Marriott International is a worldwide operator and franchiser of hotels and related lodging facilities totaling nearly $1.5 billion in net property and equipment. Assume that Marriott replaced furniture that had been used in the business for five years. The records of the company reflected the following regarding the sale of the existing furniture: Furniture (cost) Accumulated depreciation $8,000,000 7,700,000 Required: 1. Prepare the journal entry for the disposal of the furniture, assuming that it was sold for: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in dollars not in millions.) a. $300,000 cash b. $900,000 cash c. $100,000 cash

Explanation / Answer

Working Note -

1. Net Book Value of Furniture -

= Cost of Furniture - Accumulated Depriciation

= $8000000 - $7700000

= $300000

Journal entry for disposal of Furniture, assuming that it was sold for-

A. $300000

CASH Account Dr $300000

Accumulated Depriciation Account Dr $7700000

To Furniture $8000000

( Being furniture sold at no profit, no loss)

B. For $900000

Cash Account Dr $900000

Accumulated Depriciation Account Dr $7700000

To Furniture $8000000

To Gain on sale of Furniture $600000

( Being furniture sold at gain, $900000 - $300000)

C. For $100000

Cash Account Dr $100000

Accumulated Depriciation Account Dr $7700000

Loss on sale of Furniture Dr $200000

To Furniture $8000000

( Being furniture sold at loss, $300000 - $100000)

Note -

1. Debit what comes in and credit what goes out. So by sale of furniture, cash is received and furniture is disposed. So cash is debited and furniture is credited.

2. Losses are debited and gains are credited.

3. Accumulated Depriciation is a credit account but when asset is disposed, it is reversed. Hence debited.

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