Question

Stellar Corporation owns machinery that cost $26,800 when purchased on July 1, 2017. Depreciation has been recorded at a rate of $3,216 per year, resulting in a balance in accumulated depreciation of $11,256 at December 31, 2020. The machinery is sold on September 1, 2021, for $14,070. Prepare journal entries to (a) update depreciation for 2021 and (b) record the sale. (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 (b)

Answer 1

Given information

Cost of machinery $26800 purchased on July 1, 2017

Depreciation per year = $3216

Total depreciation till 1st September 2021 = $11256

Machinery sold on 1st September 2021 for $ 14070

Journal entries for the given case

1st July 2017

Particulars	Debit ($)	Credit($)
Machinery a/c	26800
To Bank a/c		26800

(Being machinery purchased)

31st December 2017

Particulars	Debit ($)	Credit ($)
Accumulated depreciation a/c	1608
Machinery a/c		1608

(Being machinery depreciated)

31st December 2018

Particulars	Debit ($)	Credit ($)
Accumulated depreciation a/c	3216
To machinery a/c		3216

(Being machinery depreciated)

31st December 2019

Particulars	Debit ($)	credit ($)
Accumulated depreciation a/c	3216
To machinery a/c		3216

(Being machinery depreciated)

31st December 2020

Particulars	debit ($)	credit ($)
Accumulated depreciation a/c	3216
To machinery a/c		3216

(Being machinery depreciated)

On 1st September 2021

Particulars	Debit ($)	Credit ($)
Accumulated depreciation a/c	2144*
To machinery a/c		2144*

(Being machinery depreciated till 31st August 2021)

* Calculation of depreciation

Depreciation from 1st january to 31st August 2021

= $3216 per year × (9÷ 12) months

= $2144

Particulars	Debit ($)	credit ($)
Bank a/c	14070
To machinery a/c		13400
To profit and loss a/c		670

(Being machinery sold and profit made on sale of machinery transferred to profit and loss account)

Particulars	Debit ($)	Credit ($)
Profit and loss a/c	13400
To accumulated depreciation a/c		13400

(Being accumulated depreciation transferred to profit and loss account)

These are all the information required to solve the above given question.

I hope, all the above mentioned calculations and explanations are useful and helpful to you.

Thank you.