Brief Exercise 9-8 Sandhill Co. sells office equipment on luly 31, 2017, for s23

Question

Brief Exercise 9-8 Sandhill Co. sells office equipment on luly 31, 2017, for s23,500 cash. The office equipment originally cost $75,080 and as of January 1, 2017, had accumulated depreciation of $41,850. Depreciation for the first 7 months of 2017 is $3,850. Prepare the journal entries to (a) update deprecation to July 31, 2017, and (b) record the sale of the equipment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit

Explanation / Answer

Depreciation entry to update depreciation for 7 months

Depreciation    $3,850

    Accumulated Depreciation     $3,850

(Being depreciation charged for 7 months)

Accumulated Depreciation

= Total accumulated depreciation at the beginning of 2017 + Depreciation for 7 months

= $41,850 + $3,850

= $ 45,700

Book value of the asset on date of Sale

= Cost – Accumulated depreciation on date of Sale

= $75,080 - $45,700

= $ 29,380

Loss on Sale of equipment

= Book value – Sales price

= $ 29,380 - $23,500

= $ 5,880

Journal Entry for Sale

Accumulated Depreciation    $45,700

Loss on Sale of equipment      $5,880

Cash                                          $23,500

    Office Equipment                      $75,080

(Being equipment sold at a loss)

   

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