Question

Sunland Company sells office equipment on July 31, 2017, for $22,080 cash. The office equipment originally cost $72,560 and as of January 1, 2017, had accumulated depreciation of $38,910. Depreciation for the first 7 months of 2017 is $4,980.

Prepare the journal entries to (a) update depreciation to July 31, 2017, and (b) record the sale of the equipment

Answer 1

Requirement a

Transaction	Date	Accounts title and explanation	Debit	Credit
a	Jul-31	Depreciation expense	$                 4,980.00
		Accumulated depreciation		$            4,980.00
		(To record depreciation for 7 months)

Requirement b

Transaction	Date	Accounts title and explanation	Debit	Credit
b	Jul-31	Cash	22080
		Accumulated depreciation	$              43,890.00
		Loss on disposal of Equipment	$                 6,590.00
		Equipment		$         72,560.00
		(To record disposal of equipment)

Working

Market value of asset received		$              22,080.00
Less: Book value of asset disposed off
cost	$             72,560.00
Less: Accumulated depreciation till disposal date	$             43,890.00	$              28,670.00
Gain(Loss)		$              (6,590.00)