Beka Company owns equipment that cost $55,610 when purchased on January 1, 2008.

Question

Beka Company owns equipment that cost $55,610 when purchased on January 1, 2008. It has been depreciated using the straight-line method based on estimated salvage value of $3,260 and an estimated useful life of 5 years.

Prepare Beka Company's journal entries to record the sale of the equipment in these four independent situations.

Sold for $32,410 on January 1, 2011. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2. Round answers to 0 decimal places, e.g. 125.) Account/Description Debit Credit

Sold for $32,410 on May 1, 2011. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2. Round answers to 0 decimal places, e.g. 125.) Account/Description Debit Credit (To update depreciation)

Sold for $10,410 on January 1, 2011. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2. Round answers to 0 decimal places, e.g. 125.) Account/Description Debit Credit

Sold for $10,410 on October 1, 2011. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2. Round answers to 0 decimal places, e.g. 125.) Account/Description Debit Credit (To update depreciation)

Explanation / Answer

Depreciation under straight line method = (Cost - salvage value ) / Useful life Depreciation under straight line method = (55610 - 3260 ) / 5 = $10470 per year Depreciation chart Year end Depreciation Accumulated depreciation Net Book value of asset December 31,2008 10470 10470 45140 December 31,2009 10470 20940 34670 December 31,2010 10470 31410 24200 December 31,2011 10470 41880 13730 December 31,2012 10470 52350 3260 Situation 1 Journal Entries Date Account Title & description Debit Credit January 1,2011 Cash 32410 Accumulated depreciation 31410 Asset 55610 Profit on sale of asset 8210 Situation 2 Depreciation for the period 1.1.2011 to 30.4.11 = (10470/12)*4 = $3490 Journal Entries Date Account Title & description Debit Credit May 1,2011 Depreciation 3490 Accumulated depreciation 3490 (Depreciation recorded for 4 months) May 1,2011 Cash 32410 Accumulated depreciation 34900 Asset 55610 Profit on sale of asset 11700 Situation 3 Journal Entries Date Account Title & description Debit Credit January 1,2011 Cash 10410 Accumulated depreciation 31410 Loss on sale of asset 13790 Asset 55610 Situation 4 Depreciation for the period 1.1.2011 to 30.9.11 = (10470/12)*9 = $7852.50 Date Account Title & description Debit Credit October 1,2011 Depreciation 7852.5 Accumulated depreciation 3490 (Depreciation recorded for 9 months) October 1,2011 Cash 10410 Accumulated depreciation 39262.5 Loss on sale of asset 5937.5 Asset 55610

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