Question

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

Pryce Company owns equipment that cost $69,000 when purchased on January 1, 2014. It has been depreciated using the straight-line method based on an estimated salvage value of $5,400 and an estimated useful life of 5 years.

Prepare Pryce 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. Round answers to 0 decimal places, e.g.125. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(a)		Sold for $33,160 on January 1, 2017.
(b)		Sold for $33,160 on May 1, 2017.
(c)		Sold for $10,700 on January 1, 2017.
(d)		Sold for $10,700 on October 1, 2017.

Answer 1

Journal entry

No	Date	Account and explanation	Debit	Credit
a	Jan 1,2017	Cash	33160
		Accumulated depreciation-Equipment (69000-5400/5)*3	38160
		Equipment		69000
		Gain on Sale of equipment		2320
		(To record sale of equipment)
b	May 1,2017	Depreciation expense (69000-5400/5)*4/12	4240
		Accumulated depreciation-Equipment		4240
		(To record Dep)
	May 1,2017	Cash	33160
		Accumulated depreciation-Equipment (38160+4240)	42400
		Gain on Sale of equipment		6560
		Equipment		69000
		(To record sale of equipment)

Journal entry

No	Date	Account and explanation	Debit	Credit
c	Jan 1,2017	Cash	10700
		Accumulated depreciation-Equipment (69000-5400/5)*3	38160
		Loss on Sale of equipment	20140
		Equipment		69000
		(To record sale of equipment)
b	Oct 1,2017	Depreciation expense (69000-5400/5)*9/12	9540
		Accumulated depreciation-Equipment		9540
		(To record Dep)
	Oct 1,2017	Cash	10700
		Accumulated depreciation-Equipment (38160+9540)	47700
		Loss on Sale of equipment	10600
		Equipment		69000
		(To record sale of equipment)