Carla Vista Company owns
equipment that cost $81,000 when purchased on January 1, 2019. It
has been depreciated using the straight-line method based on an
estimated salvage value of $21,000 and an estimated useful life of
5 years.
Prepare Carla Vista 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 $46,000 on January 1, 2022. | |
(b) | Sold for $46,000 on May 1, 2022. | |
(c) | Sold for $22,000 on January 1, 2022. | |
(d) | Sold for $22,000 on October 1, 2022 |
No. | Account title and explanation | Debit | Credit |
(a) | Cash | $46,000 | |
Accumulated depreciation-equipment [12,000 x 3 years] | $36,000 | ||
Equipment | $81,000 | ||
Gain on sale of equipment | $1,000 | ||
[To record sale of equipment] | |||
(b) | Depreciation expense [12,000 x (4 months/12 months)] | $4,000 | |
Accumulated depreciation-equipment | $4,000 | ||
[To record depreciation expense] | |||
Cash | $46,000 | ||
Accumulated depreciation-equipment [(12,000 x 3 years) + 4,000] | $40,000 | ||
Equipment | $81,000 | ||
Gain on sale of equipment | $5,000 | ||
[To record sale of equipment] | |||
(c ) | Cash | $22,000 | |
Accumulated depreciation-equipment [12,000 x 3 years] | $36,000 | ||
Loss on sale of equipment | $23,000 | ||
Equipment | $81,000 | ||
[To record sale of equipment] | |||
(d) | Depreciation expense [12,000 x (9 months/12 months)] | $9,000 | |
Accumulated depreciation-equipment | $9,000 | ||
[To record depreciation expense] | |||
Cash | $22,000 | ||
Accumulated depreciation-equipment [(12,000 x 3 years) + 9,000] | $45,000 | ||
Loss on sale of equipment | $14,000 | ||
Equipment | $81,000 | ||
[To record sale of equipment] |
Calculations:
Depreciation expense per year = (Cost - Salvage value) ÷ Useful life
=(81,000-21,000)/5
=$12,000
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