Question

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On January 2, 2016, Sweet Pet purchased fixtures for $41,700 cash, expecting the fixtures to remain in service for seven years. Sweet Pet has depreciated the fixtures on a straight-line basis, with $6,000 residual value On April 30, 2018, Sweet Pet sold the fixtures for $23,300 cash Record both depreciation expense for 2018 and sale of the fixtures on April 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 Apr. 30, 2018. Accounts and Explanation Date Debit Credit Apr 30 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) Now, record the sale of the fixtures on April 30, 2018. Debit Credit Accounts and Explanation Date Apr. 30

Answer 1

Annual depreciation = (Cost of equipment - Residual value)/Useful life

= (41,700 - 6,000)/7

= 35,700/7

= $5,100

Depreciation expense on April 30, 2018 = 5,100 x 4/12

= $1,700

Journal

Date	Account Title and Explanation	Debit	Credit
April 30, 2018	Depreciation expense	1,700
	Accumulated depreciation - Equipment		1,700

Accumulated depreciation till the date of sale = 5,100 x 2 + 1,700

= $11,900

Market value of assets received		23,300
Less : Book value of assets disposed of
Cost	41,700
Less : Accumulated depreciation	-11,900	-29,800
Loss		- $6,500

Journal

Date	Account Title and Explanation	Debit	Credit
April 30, 2018	cash	23,300
	Accumulated depreciation - Equipment	11,900
	Loss on disposal of equipment	6,500
	Equipment		41,700

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