Pina Colada Corp, owns equipment that cost $62,700 when purchased on January 1,
ID: 2556379 • Letter: P
Question
Pina Colada Corp, owns equipment that cost $62,700 when purchased on January 1, 2016. It has been depreciated using the straight-line method based on an estimated salvage value of $4,500 and an estimated useful life of 5 years Prepare Pina Colada Corp.'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 O for the amounts.) (a) Sold for $29,920 on January 1, 2019. (b) Sold for $29,920 on May 1, 2019. (c) Sold for $10,300 on January 1, 2019 (d) Sold for $10,300 on October 1, 2019. No. Account Titles and Explanation Debit Credit (To record depreciation)Explanation / Answer
No. Account titles and explanation Debit Credit (a) Cash $ 29,920 Accumulated depreciation $ 34,920 Equipment $ 62,700 Profit on sale of equipment $ 2,140 (To record sale of equipment) (b) Cash $ 29,920 Accumulated depreciation $ 38,800 Equipment $ 62,700 Profit on sale of equipment $ 6,020 (To record sale of equipment) (c) Cash $ 10,300 Accumulated depreciation $ 34,920 Equipment $ 62,700 Loss on sale of equipment $ 17,480 (To record sale of equipment) (d) Cash $ 10,300 Accumulated depreciation $ 43,650 Equipment $ 62,700 Loss on sale of equipment $ 8,750 (To record sale of equipment) Working: (a) Straight Line depreciation = (Cost-Salvage Value)/Estimated useful life = (62700-4500)/5 = $ 11,640 Period between January 1, 2016 to January 1, 2019 = 3 years Accumulated depreciation for 3 years = $ 11,640 x 3 = $ 34,920 (b) Period between January 1, 2016 to May 1, 2019 = 3 years and 4 months Straight Line depreciation = (Cost-Salvage Value)/Estimated useful life = (62700-4500)/5 = $ 11,640 Partial depreciation in year 4 = $ 11,640 x 4/12 = $ 3,880 Accumulated depreciation for 3 years = $ 11,640 x 3 = $ 34,920 Total accumulted depreciation for 3 years and 4 months = $ 34,920 + $ 3,880 = $ 38,800 (c) Straight Line depreciation = (Cost-Salvage Value)/Estimated useful life = (62700-4500)/5 = $ 11,640 Period between January 1, 2016 to January 1, 2019 = 3 years Accumulated depreciation for 3 years = $ 11,640 x 3 = $ 34,920 (d) Period between January 1, 2016 to October 1, 2019 = 3 years and 9 months Straight Line depreciation = (Cost-Salvage Value)/Estimated useful life = (62700-4500)/5 = $ 11,640 Partial depreciation in year 4 = $ 11,640 x 9/12 = $ 8,730 Accumulated depreciation for 3 years = $ 11,640 x 3 = $ 34,920 Total accumulted depreciation for 3 years and 9 months = $ 34,920 + $ 8,730 = $ 43,650