Question

60.10 Pryce Company owns equipment that cost $65,000 when purchased on January 1, Jouma 2012. It has been depreciated using the straight-line method based on an estimated salvage of equi value of $5,000 and an estimated useful life of 5 years. (LO 4) Instructions Prepare Pryce Company's journal entries to record the sale of the equipment in these four independent situations. (a) Sold for $31,000 on January 1, 2015. Do te m bes (b) Sold for $31,000 on May 1, 2015. (©) Sold for $11.000 on January 1, 2015. (d) Sold for $11,000 on October 1, 2015. 000 mine estimated to have Journa

Answer 1

Debit Credit Si.No. (a) $31,000 $36,000 Date Account titles and Explanation January.1, 2015 Cash Accumulated Depreciation - Equipment Equipment Gain on sale of Equipment (Being sale of equipment recorded) $65,000 $ 2,000 (b) May.1,2015 $ 4,000 Depreciation Expense Accumulated Depreciation - Equipment (Being depreciation Expense recorded) $ 4,000 May. 1,2015 $31,000 $ 40,000 Cash Accumulated Depreciation - Equipment Equipment Gain on sale of Equipment (Being sale of equipment recorded) $65,000 $ 6,000 ) January 1, 2015 Cash Accumulated Depreciation - Equipment Loss on sale of Equipment Equipment (Being sale of equipment recorded) $11,000 $36,000 $18,000 $65,000 $ 9,000 October.1,2015 Depreciation Expense Accumulated Depreciation - Equipment (Being depreciation Expense recorded) $ 9,000

October 1,2015 Cash Accumulated Depreciation - Equipment Loss on sale of Equipment Equipment (Being sale of equipment recorded) $11,000 $45,000 $ 9,000 $65,000 Working Notes: Equipment Cost = $65,000 Salvage Value = $5,000 Useful Life = 5 (a) Depreciation = ($65,000-$5,000)/5 = $12,000 Accumulated Depreciation up to January 1 2015 = $12,000*3 = $36,000 Gain on Sale of equipment = $31,000+$36,000-$65,000 = $2,000 (b) Depreciation up to May 1,2015 = $12,000*4/12 = $4,000 Accumulated Depreciation up to May 1,2015 = $36,000+$4,000 = $40,000 Gain on sale of Equipment = $31,000+$40,000-$65,000 = $6,000 (c) Loss on sale of Equipment = $65,000-$11,000-$36,000 = $18,000 (d) Depreciation up to October 1, 2015 = $12,000*9/12 = $9,000 Accumulated Depreciation up to October 1,2015 = $36,000+$9,000 = $45,000 Loss on sale of Equipment = $65,000-$11,000-$45,000 = $9,000