Question

As part of a major renovation at the beginning of the year, Atiase Pharmaceuticals, Inc. sold shelving units (recorded as Equipment) that were 10 years old for $1,400 cash. The shelves originally cost $8,800 and had been depreciated on a straight-line basis over an estimated useful life of 10 years with an estimated residual value of $800.

1. Prepare the journal entry to record the sale of the shelving units. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)2. 2. 2.Complete the table below, indicating the account, amount, and direction of the effect on disposal. Assume that depreciation has been recorded to the date of sale. (Enter any decreases to Assets, Liabilities, or Stockholders' Equity with a minus sign. Do not round intermediate calculations.)

Answer 1

Journal Entry to record the sale of Shelving Units

Account Titles and Explanation	Debit ($)	Credit ($)
Cash A/c	1,400
Accumulated Depreciation - Equipment	8,000
To Equipment A/c		8,800
To Gain on sale of Equipment A/c		6,00
[ Entry to record the sale of shelving units for $1,400]

• Cost of the Equipment = $8,800
• Accumulated Depreciation on Equipment = $8,000 [($8,800 - $800) / 10 Years] x 10 Years
• Book Value at the end of 10^th Year = $800 [$8,800 - $8,000]
• Sale Proceeds of the Equipment = $1,400
• Therefore, Gain on sale of Equipment = $600 [$1,400 - $800]