Question

on january 1 2016 horton inc sells a machine for 21000 the machine originaly purchased on jan 1 2014 for 43500 the machine estimated to have a useful life of 5 years no residual value horton uses straight line depreciation prepare journal entry for record the sale

record the entry for sale of equipment

Answer 1

machine purchased = Jan 1, 2014 - $43,500 Machine Sold = Jan 1, 2016 - $ 21,000 since, machine was sold before it is fully depreciated. useful life of machine = 5years Residual value = $0 Deprecation [slm basis] = $43,500 = $ 8700 Syears Entries to record sale of machine Date Accounts Debit credit Jan I Depreciation expense { $8700x2] $ 17,400 Accumulated Depreciation $17,400 [To record depreciation up to date of disposal] Cash $ 21,000 Accumulated depreciation $ 17,400 loss on disposal of machine $ 5,100 To Machine $43,500 [ To record sale of machine] Jan 1