Prepare the journal entries to record the following transactions for Reese Compa
ID: 2460298 • Letter: P
Question
Prepare the journal entries to record the following transactions for Reese Company, which has a calendar year end and uses the straight-line method of depreciation. On September 30, 2014, the company sold old equipment for $46,000. The equipment was purchased on January 1, 2012, for $96,000 and was estimated to have a $16,000 salvage value at the end of its 5-year life. Depreciation on the equipment has been recorded through December 31, 2013. On June 30, 2014, the company sold old equipment for $24,000. The equipment originally cost $36,000 and had accumulated depreciation to the date of disposal of $15,000.Explanation / Answer
a) Journal entries:
Sept 30, 2014
Debit Depreciation $12000
Credit Accumulated Depreciation on equipment $12000
(depreciation for 9 months to Sept 30)
Debit Cash $46000
Debit Accumulated Depreciation on equipment $44000
Debit Loss on sale of equipment $6000
Credit Equipment $96000
(loss on sale of equipment)
b)
June 30, 2014
Debit Cash $24000
Debit Accumulated Depreciation $15000
Credit Old Equipment $36000
Credit Profit on sale of equipment $3000