Exercise 10-10 Pryce Company owns equipment that cost $69,500 when purchased on

Question

Exercise 10-10 Pryce Company owns equipment that cost $69,500 when purchased on January 1, 2014. It has been depreciated using the straight-line method based on estimated salvage value of $3,200 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 0 for the amounts.)

(a) Sold for $34,780 on January 1, 2017.

(b) Sold for $34,780 on May 1, 2017.

(c) Sold for $10,800 on January 1, 2017.

(d) Sold for $10,800 on October 1, 2017. No. Account Titles and Explanation Debit Credit

Explanation / Answer

Straight line depreciation = (initial cost - salvage value ) / life of asset Initial cost 69500 Salvage value 3200 Life of asset 5 Straight line depreciation per year 13260 (69500-3200)/5 a Depreciation for 3 years 13260*3 39780 Cost of assets 69500 Accumulated depreciation at jan 1 2017 39780 (13260*3) Book value at jan 1 2017 29720 Sales proceeds 34780 Profit on sale of equipment 5060 Cash 34780 Accumulated depreciation 39780              Equipment 69500              Profit on sale of equipment 5060 b Cost of assets 69500 Accumulated depreciation at May 1 2017 44200 (13260*3+13260*4/12) Book value at jan 1 2017 25300 Sales proceeds 34780 Profit on sale of equipment 9480 Cash 34780 Accumulated depreciation 44200              Equipment 69500              Profit on sale of equipment 9480 c Cost of assets 69500 Accumulated depreciation at jan 1 2017 39780 (13260*3) Book value at jan 1 2017 29720 Sales proceeds 10800 Loss on sale of equipment -18920 Cash 10800 Accumulated depreciation 39780 Loss on sale of equipment 18920              Equipment 69500 d Cost of assets 69500 Accumulated depreciation at May 1 2017 49725 (13260*3+13260*9/12) Book value at jan 1 2017 19775 Sales proceeds 10800 Loss on sale of equipment -8975 Cash 10800 Accumulated depreciation 49725 Loss on sale of equipment 8975              Equipment 69500

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