QUESTION #14-DISPOSALOF PROPERTY PLANT& EQUIPMENT Saint Nick &Sons; sold equipme

Question

QUESTION #14-DISPOSALOF PROPERTY PLANT& EQUIPMENT Saint Nick &Sons; sold equipment for cash on December 31 2017 The Balance Sheet on that day showed the following balances relating to this asset Equipment $130,000 Accumulated depreciation- Equipment $105,000 (1) What is the Book Value of the Equipment (2) Record the entry required on December 31, 2017 to record the sale if the equipment was sold for $45,000. Debit Credit (3) Date Account (3) Record the entry required on December 31, 2017 to record the sale if the equipment was sold for $5,000. Date Account Debit Credit

Explanation / Answer

1. Book value = $130000 - $105000 = $25000

2. if equipment is sold for $45000:

gain on sale = $45000-$25000 = $20000

Journal entry:

Cash $45000

To Equipment $25000

To Gain on sale of equipment $20000

3. if equipment is sold for $5000:

Loss on sale = $25000 - $5000 = $20000

Journal entry:

Cash $5000

Loss on sale of equipment $20000

To Equipment $25000

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