ue 2 ours, 1 mntes. bue lue 037207 2018 3200 ph model. They had purchased the ol

Question

ue 2 ours, 1 mntes. bue lue 037207 2018 3200 ph model. They had purchased the old Grey's Inc. decided to dispose of a piece of equipment and upgrade to a new evaporator on January 1, 2012 for $16,100. There was no salvage/residual value and the useful life Grey's used was 6 years. Grey's depreciated the machinery using the Straight Line method. Grey's sold the equipment on June 30, 2016 to Tavon for $2625 a) Calculate the Book Value at time of sale. (Do not round the depreciation per year) b) Calculate Grey's gain or loss on this sale? Enter a loss as a negative value c) Journalize this sale on Grey's books on June 30, 2016. Date Description Debit Credit June 30

Explanation / Answer

a) Straight line dep = 16100/6 = 2683.33 per year

Accumlated dep for 4.5 year = 2683.33*4.5 = 12075

book value at time of sale = 16100-12075 = 4025

b) loss on sale = 2625-4025 = 1400

c) Journal entry :

Date Description debit credit June 30,2016 Accumlated depreciation 12075 Cash 2625 Loss on sale of equipment 1400      Equipment 16100

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