Exercise 9-10 Your answer is partially correct. Try again. Pryce Company owns eq

Question

Exercise 9-10 Your answer is partially correct. Try again. Pryce Company owns equipment that cost $66,800 when purchased on January 1, 2014. It has been depreciated using the straight-line method based on an estimated salvage value of $4,000 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 o for the amounts.) (a) Sold for $32,680 on January 1, 2017. (b) Sold for $32,680 on May 1, 2017 (c) Sold for $10,200 on January 1, 2017. (d) Sold for $10,200 on October 1, 2017. No. Account Titles and Explanation Debit Credit (a) Tcasth 32680 Accumulated Depreciation 66800 Equipment 3560 Gain on Disposal of Pla 32680 (b) TTCash 41867 Accumulated Depreciation

Explanation / Answer

Calculation of Depreciation %:

Annual Depreciation = (Cost of Asset - Net scrap value) / Useful life

= (66,800 - 4,000) / 5

= 62,800 / 5

= $12,560

Depreciation % = (Annual Depreciation / Cost of asset) * 100

= (12,560 - 66,800) *100

= .1880 * 100

= 18.8%

Journal Entry:

Date Particulars Debit($) Credit($)

a) Jan 1,2017 Cash A/c Dr. 32,680

Accumulated Depreciation A/c Dr. (12,560 * 3) 37,680

To Equipment A/c 66,800

To Profit on sale of Equipment A/c 3,560

(Being Equipment sold on profit on Jan 1,2017)

b) May 1,2017 Cash A/c Dr. 32,680  

Accumulated Depreciation A/c Dr. [(12,560 * 3)+12,560*(4/12)] 41,868   

To Equipment A/c 66,800  

To Profit on sale of Equipment A/c 7,748

(Being Equipment sold on profit on May 1,2017)

c) Jan 1,2017 Cash A/c Dr. 10,200  

Accumulated Depreciation A/c Dr. (12,560 * 3) 37,680

Loss on sale of Equipment A/c Dr. 18,920

To Equipment A/c 66,800

(Being Equipment sold on loss on Jan 1,2017)

d) Oct 1,2017 Cash A/c Dr. 10,200  

Accumulated Depreciation A/c Dr. [(12,560 * 3)+12,560*(9/12)] 47,100   

Loss on sale of Equipment A/c Dr. 9,500

To Equipment A/c 66,800

(Being Equipment sold on loss on Oct 1,2017)

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