Question

Sunland Company sells office equipment on July 31, 2022, for $22,080 cash. The office equipment originally cost $72,560 and as of January 1, 2022, had accumulated depreciation of $38,910. Depreciation for the first 7 months of 2022 is $4.980. Prepare the journal entries to (a) update depreciation to July 31, 2022, and (b) record the sale of the equipment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter o for the amounts.) No. Account Titles and Explanation Debit Credit (a) Depreciation Expense 4.980 Accumulated Depreciation Equipment 4,980 Cash 22,080 (b) 43890 Accumulated Depreciation Equipment Equipment 6.590 Loss on Disposal of Plant Assets

Answer 1

Accumulated depreciation on Jan 1 , 2022 = $38,910

Depreciation for first 7 months of 2022 = $4,980

Accumulated depreciation on July 31 , 2022 = Accumulated depreciation on Jan 1 , 2022 + Depreciation for first 7 months of 2022

= 38,910+4,980

= $43,890

Sale price of equipment = $22,080

Book value of equipment on July 31, 2022 = Cost price - Accumulated depreciation

= 72,560-43,890

= $28,670

Loss on disposal of equipment = Book value of equipment on July 31, 2022 - Sale price of equipment

= 28,670-22,080

= $6,590

No.	Account Titles and Explanation	Debit	Credit
(a)	Depreciation expense	$4,980
	Accumulated depreciation- equipment		$4,980
(b)	Cash	$22,080
	Accumulated depreciation - equipment	$43,890
	Loss on disposal of equipment	$6,590
	Equipment		$72,560

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