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Your answer is partially correct. Try again. 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 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 0 decimal places, e.g.125. If no entry is required, select "No Entry" for the account titles and enter O 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 () Cash 31000 36000 Equipment ain on Disposal of Plant (b) Cash 31000 (To record depreciation) Equipment Gain on Disposal of Plant Assets (To record sale of equipment) 11000 36000 Loss on Disposal of Plant 18000 Equipment L65000

Explanation / Answer

a) Sold for $31000 on January 1,2017:

Depreciation per year = (65000 - 5000)/5 = 12000

Depreciation for 3 years = 12000*3 = 36000

Book Value as on January 1,2017 = 65000 - 36000 = 29000

Sale value as on January 1,2017 = 31000

Gain on disposal of plant assets = 31000 - 29000 = 2000

Journal entry:

Cash Dr 31000

Accumulated depreciation - Equipment Dr 36000

Equipment Cr 65000

Gain on disposal of plant assets Cr 2000

b) Sold for $31000 on May 1,2017:

Depreciation per year = (65000 - 5000)/5 = 12000

Depreciation for 3 years and 4 months = 12000*3 + 12000/12 *4 = 36000 + 4000 = 40000

Book Value as on May 1,2017 = 65000 - 40000 = 25000

Sale value as on May 1,2017 = 31000

Gain on disposal of plant assets = 31000 - 25000 = 6000

Journal entry:

1)

Depreciation Expense Dr 40000

Accumulated depreciation - Equipment Cr 40000

2)

Cash Dr 31000

Accumulated depreciation - Equipment Dr 40000

Equipment Cr 65000

Gain on disposal of plant assets Cr 6000

c) Sold for $11000 on January 1,2017:

Depreciation per year = (65000 - 5000)/5 = 12000

Depreciation for 3 years = 12000*3 = 36000

Book Value as on January 1,2017 = 65000 - 36000 = 29000

Sale value as on January 1,2017 = 11000

Loss on disposal of plant assets = 29000 - 11000 = 18000

Journal entry:

Cash Dr 11000

Accumulated depreciation - Equipment Dr 36000

Loss on disposal of plant assets Dr 18000

Equipment Cr 65000

d) Sold for $11000 on October 1,2017:

Depreciation per year = (65000 - 5000)/5 = 12000

Depreciation for 3 years and 9 months = 12000*3 + 12000/12 *9 = 36000 + 9000 = 45000

Book Value as on October 1,2017 = 65000 - 45000 = 20000

Sale value as on October 1,2017 = 11000

Loss on disposal of plant assets = 11000 - 20000 = 9000

Journal entry:

1)

Depreciation Expense Dr 45000

Accumulated depreciation - Equipment Cr 45000

2)

Cash Dr 11000

Accumulated depreciation - Equipment Dr 45000

Loss on disposal of plant assets Dr 9000

Equipment Cr 65000

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