Chart of Accounts General Journal General Journal Computer equipment (office equ
ID: 2571573 • Letter: C
Question
Chart of Accounts General Journal General Journal Computer equipment (office equipment) purchased 6 1/2 years ago for $170,000, with an estimated life of 8 years and a residual value of $10,000, Is now sold for $60,000 cash. (Appropriate entries for depreciation had been made for the first six years of use.) Journalize (a) Record the (b) Record the (c) Assuming Required: Refer to the Journalize the following entries on December 31: (a) Record the depreciation for the one-half year prior to the sale, using the straight-line method. (b) Record the sale of the equipment. (c) Assuming that the equipment had been sold for $25,000 cash, prepare the entry to record the sale.* DATE Refer to the Chart of Accounts for exact wording of account tities :0 Check My Work actice Assignment Score: 94.74% All work savedExplanation / Answer
Working notes :
Depreciation on equipment for currect year till date of sale = [ ($170,000 - $10,000) / 8 years ] * 6/12 = $10,000
Balance in Accumulated Depreciation till the date of sale = [ ($170,000 - $10,000) / 8 years ] * 6.5 = $130,000
(b) Gain on sale of equipment : Sales value - WDV on date of sale = $60,000 - ($170,000 - $130,000) = $20,000
(c) Loss on sale of equipment : WDV on date of sale - Sales value = ($170,000 - $130,000) - $25,000 = $15,000
Journal Entries
a) December 31
Note : As the question mentioned to refer the chart of accounts for excat wordind of account titles but the chart is not pasted here . Therefore it is requested to only cross check the account titles with the chat provided.
Date Description Debit ($) Credit ($)a) December 31
Depreciation Expense - Office Equipment 10,000 Accumulated Depreciation - Office Equipment 10,000 (To record depreciation) b) December 31 Cash 60,000 Accumulated Depreciation - Office Equipment 130,000 Office Equipment 170,000 Gain on sale of fixed assets 20,000 (To record sale of office equipment & gain thereon) c) December 31 Cash 25,000 Accumulated Depreciation - Office Equipment 130,000 Loss on sale of fixed assets 15,000 Office Equipment 170,000 (To record sale of office equipment & loss thereon)