Pryce Company owns equipment that cost $72,000 when purchased on January 1, 2012

Question

Pryce Company owns equipment that cost $72,000 when purchased on January 1, 2012. It has been depreciated using the straight-line method based on estimated salvage value of $3,000 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.

(a) Sold for $42,400 on January 1, 2015. (b) Sold for $42,400 on May 1, 2015 (c) Sold for $10,160 on January 1, 2015. (d) Sold for $10,160 on October 1, 2015. No. Account Titles and Explanation Debit Credit To record depreciation) To record sale of equipment) ?oil? To record depreciation) To record sale of equipment)

Explanation / Answer

a)

b)

c)

d)

Cost of equipment $ 72,000 Less: Salvage value $ (3,000) Depreciable value $ 69,000 Life of the assets 5 years Depreciation per year ($69,000/5) $ 13,800 Accumulated depreciation as on 01 Jan 2015 ($13,800*3) $ 41,400

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