How do I Jurnalize: Sold used shop equipment (metal lathe) for $320.00. The equi

Question

How do I Jurnalize:

Sold used shop equipment (metal lathe) for $320.00. The equipment was purchased at a total cost of $2,200.00 early in 2009. Using units of production depreciation, the accumulated depreciation account balance at the end of the first quarter (March 31) totals $1,830.00 Depreciation is recorded at the rate of $1.00 for each hour of operation. Through June 23 of this quarter, an additional 260 hours of operation have accumulated on the lathe’s meter. (1) Record the depreciation. Invoice Number: DEPRE (for depreciation). (2) Record the sale of the asset. Invoice Number: ASALE (for asset sale).

Explanation / Answer

Part 1)

The journal entry to record the depreciation for the current period would involve a debit to depreciation expense and a credit to accumulated depreciation. The journal entry is as follows:

___________

Part B)

The journal entry to record the sale would inolve debit to cash account with the amount realized on the sale of lathe and credit to the lathe account with purchase cost. The accumulated depreciation account would now be debited with the balance as on March 31 and the amount of depreciation for the current period (as shown in Part A). The difference (if any) would be debited/credit to Loss on Sale/Gain on Sale. The journal entry is as follows:

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