Question

Pharoah Company purchased equipment in 2020 for $104,000 and estimated an $8,000 salvage value at the end of the equipment's 10-year useful life. At December 31, 2021, there was $67,200 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2022, the equipment was sold for $21,000. Prepare the appropriate journal entries to remove the equipment from the books of Pharoah Company on March 31, 2022. (Credit account titles are automatically indented when the 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.) No. Account Titles and Explanation Debit Credit 1. (To record depreciation expense for the first 3 months of 2022) 2. (To record sale of equipment)

Answer 1

Journal entries:

Date	Account title	Debit	Credit
March 31, 2022	Depreciation expenses Accumulated depreciation	$2400 .	. $2400
March 31, 2022	Cash accumulated depreciation ($67200 + $2400 Loss on sale of equipment Equipment	$21000 $69600 $13400 .	. . . $104000

Depreciation expenses per annum = ($104000 - $8000)/10 = $9600

depreciation expenses for first 3 months of 2020 = $9600 x (3/12) = $2400