On January 2, 2016, Pet Salon purchased fixtures for $41,000 cash, expecting the

Question

On January 2, 2016, Pet Salon purchased fixtures for $41,000 cash, expecting the fixtures to remain in service for five years. Pet Salon has depreciated the fixtures on a straight-line basis, with $5,000 residual value. On June 30, 2018, Pet Salon sold the fixtures for $19,500 cash. Record both depreciation expense for 2018 and sale of the fixtures on June 30, 2018. (Assume the modified half-month convention is used. Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by recording the depreciation expense as of Jun. 30, 2018. Date Debit Credit Jun. 30 Depreciation Expense-Fixtures 3,600 Accumulated Depreciation Fixtures To record depreciation on fixtures. Before recording the sale of the fixtures, let's calculate any gain or loss on the sale of the fixtures. (Enter a loss with a minus sign or parentheses.) Market value of assets received Less: Book value of asset disposed of Cost Less: Accumulated Depreciation Gain or (Loss)

Explanation / Answer

Calculate gain or loss on the sale of the fixtures :

Market value of assets received 19500 Less: Book value of asset disposed off Cost 41000 Less: Accumlated depreciation (7200*2+3600) 18000 23000 Gain or loss (3500)

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