Question

Exercise 9-11

Sheridan Company owns equipment that cost $79,000 when purchased on January 1, 2019. It has been depreciated using the straight-line method based on an estimated salvage value of $19,000 and an estimated useful life of 5 years.

Prepare Sheridan 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 $45,000 on January 1, 2022.
(b)		Sold for $45,000 on May 1, 2022.
(c)		Sold for $21,000 on January 1, 2022.
(d)		Sold for $21,000 on October 1, 2022.

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

Answer 1

Particulars Amount Equipment cost $79,000 Less: Salvage Value -$19.000 Depreciable Amount $60,000 Useful Life 5 years Depreciation- Straight Line $12,000 Depreciation Schedule Year Opening bal Depreciation Closing Bal 2019 $79,000 -$12.0001 $67,000 2020 $67,000 -$12,000 $55,000 2021 $55,000 -$12.000 $43,000 2022 $43,000 -$12.000 $31,000 2023 $31,000 -$12,000 $19,000 Depreciation per month = $12000/12 = $1000

No. Credit Particulars Debit 1 Sold for $45,000 on January 01, 2022 $45,000 Bank alc To Equipment To Profit on Sale (To record Sale of Equipment Sold for $45,000 on May 01, 2022 $43,000 $2,000 $4,000 a Depreciation To Equipment (To record Depreciation) $4,000 $45,000 b Bank a/c To Equipment To Profit on Sale (To record Sale of Equipment) $39,000 $6,000

Credit Particulars Debit 3 Sold for $21,000 on January 01, 2022 $21,000 $22,000 Bank alc Loss on Sale To Equipment (To record Sale of Equipment) 4 Sold for $21,000 on October 01, 2022 $43,000 $9.000 a Depreciation To Equipment To record Depreciation) $9,000 $21,000 $13,000 b Bank a/c Loss on Sale To Equipment (To record Sale of Equipment) $34,000