Question

Crane Company owns equipment that cost $78,000 when purchased on January 1, 2019. It has been depreciated using the straight-line method based on an estimated salvage value of $18,000 and an estimated useful life of 5 years.

Prepare Crane Company’s journal entries to record the sale of the equipment in these four independent situations. (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 0 for the amounts.)

(a)		Sold for $44,000 on January 1, 2022.
(b)		Sold for $44,000 on May 1, 2022.
(c)		Sold for $20,000 on January 1, 2022.
(d)		Sold for $20,000 on October 1, 2022.

No. Account Titles and Explanation Debit Credit (a) (b) (To record depreciation) (To record sale of equipment) (c)

Answer 1

	Depreciation expense
	(78000-18000)/5
	12000
No	Account titles & Explanations					Debit	Credit
a)	Cash					44,000
	Accumulated depreciation					36000
	Gain on sale						2,000
	Equipment						78000
b)	Depreciation expense					4000
	Accumulated depreciaiton-Equipment						4000
	Cash					44,000
	Accumulated depreciation					40000
	Gain on sale						6,000
	Equipment						78000
c)	Cash					20,000
	Accumulated depreciation					36000
	loss on disposal/sale					22,000
	Equipment						78000
d)	Depreciation expense					9000
	Accumulated depreciaiton-Equipment						9000
	Cash					20,000
	Accumulated depreciation					45000
	loss on disposal					13,000
	Equipment						78000