Question

Marriott International is a worldwide operator and franchisor of hotels and related lodging facilities totalling over $1.4 billion in property and equipment. It also develops, operates, and markets time-share properties totalling nearly $2 billion. Assume that Marriott replaced furniture that had been used in the business for five years. The records of the company reflected the following regarding the sale of the existing furniture:

Furniture (cost)	$	6,000,000
Accumulated depreciation		5,500,000

Required:
1.	Prepare the journal entry for the disposal of the furniture, assuming that it was sold for a. $500,000 cash b. $1,600,000 cash c. $400,000 cash

Answer 1

a.

Cash Account Dr 500000

Accumulated Depreciation Dr 5500000

To Furniture Account 6000000

b.

Cash Account Dr 500000

Accumulated Depreciation Dr 5500000

To Furniture Account 6000000

To Gain in sale of Furniture 1100000 (Balancing Figure)

c.

Cash Account Dr 500000

Accumulated Depreciation Dr 5500000

Loss on sale Dr 100000 (Balancing Figure)

To Furniture Account 6000000

Cash will come so it will be debited in each case

Accumulated Depreciation will be reversed with the amount of Depreciation

Furniture Account will be reversed so credited

Gain on sale/ Loss on sale will be balancing figure