Pryce Company owns equipment that cost $60,900 when purchased on January 1, 2014

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

Depreciation under straight line method = (Cost of asset - salvage value)/useful life 56600 Depreciation per annum = (60900-4300)/5 = $11320 11320 Accumulated Depreciation for the year ended Dec 31, 2016 = $11320*3 = $33960 33960 Book value as on Jan 1, 2017 = 60900-33960 = $26940 26940 Date Account Head & Description Debit Amount Credit Amount a) Jan 1, 2017 Cash 28960 Accumulated depreciation - Equipment 33960 Gain on sale of equipment (balance) 2020 Equipment 60900 (to record sale of equipment) b) May 1, 2017 Cash 28960 Accumulated depreciation - Equipment (33960+3773.33)           37,733.33 Gain on sale of equipment (balance)               5,793.33 Equipment 60900 (to record sale of equipment) May 1, 2017 Depreciation expense (11320*4/12)             3,773.33 Accumulated depreciation - Equipment               3,773.33 (to record the depreciation) c) Jan 1, 2017 Cash 11000 Accumulated depreciation - Equipment 33960 Loss on sale of equipment (balance) 15940 Equipment 60900 (to record sale of equipment) d) Oct 1, 2017 Cash 11000 Accumulated depreciation - Equipment (33960+8490)           42,450.00 Loss on sale of equipment (balance)             7,450.00 Equipment 60900 (to record sale of equipment) Oct 1, 2017 Depreciation expense (11320*9/12)             8,490.00 Accumulated depreciation - Equipment               8,490.00 (to record the depreciation)

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.