Pryce Company owns equipment that cost $60,900 when purchased on January 1, 2014
ID: 2527691 • Letter: P
Question
Pryce Company owns equipment that cost $60,900 when purchased on January 1, 2014. It has been depreciated using the straight-line method based on estimated salvage value of $4,300 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.)
No.
Account Titles and Explanation
Debit
Credit
(To record depreciation)
(To record sale of equipment)
(To record depreciation)
(To record sale of equipment)
(a) Sold for $28,960 on January 1, 2017. (b) Sold for $28,960 on May 1, 2017. (c) Sold for $11,000 on January 1, 2017. (d) Sold for $11,000 on October 1, 2017.Explanation / Answer
Cost of Equipment: $ 60900 Salvage value : $ 4300 Life: 5 years Annual Depreciation (Cost-Salvage)/Life: (60900-4300)/5 = 11320 Accumulated depreciation balance as on Dec 31 2016: 11320 *6= 33960 Journal Entries No. Date Accounts title and explanations Debit $ Credit $ casea: Jan 12017 Cash Account Dr. 28960 Accumulated depreciation Dr. 33960 Equipment Account 60900 Gain on sale of equipment 2020 case b: May1 2017 Depreciation expense Dr. ( 11320*4/12) 3773 Accumulated depreciation 3773 May1 2017 Cash Account Dr. 28960 Accumulated depreciation Dr. 37733 Equipment Account 60900 Gain on sale of equipment 5793 Case-c Jan 1 2017 Cash Account Dr. 11000 Accumulated depreciation Dr. 33960 Loss on sale of Equipment Dr. 15940 Equipment Account 60900 Case-d: Oct 12017 Depreciation expense Dr. ( 11320*9/12) 8490 Accumulated depreciation 8490 Oct 12017 Cash Account Dr. 11000 Accumulated depreciation Dr. 42450 Loss on sale of Equipment Dr. 7450 Equipment Account 60900
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.