Exercise 9-10 Pina Colada Corp. owns equipment that cost $62,700 when purchased

Question

Exercise 9-10 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 O decimal places, e.g.125. If no entry is required, select "No Entry" for the account titles and enter 0 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.

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount Cost              62,700.00 Salvage Value                4,500.00 Life in years                        5.00 Depreciation per year = (62700 - 4500)/5              11,640.00 Depreciation for 3 years i.e. 2016 to 2018 = 11640 * 3              34,920.00 a) Dr Cr Cash Dr              29,920.00 Accumulated depreciation Dr              34,920.00 To Equipment              62,700.00 To Profit on sale of equipment= 29920 + 34920 - 62700                2,140.00 b) Depreciation Dr                3,880.00 To Accumulated depreciation                3,880.00 (11640/12*4) Cash Dr              29,920.00 Accumulated depreciation Dr = 34920 + 3880              38,800.00 To Equipment              62,700.00 To Profit on sale of equipment= 29920 + 38800 - 62700                6,020.00 c) Cash Dr              10,300.00 Accumulated depreciation Dr              34,920.00 Loss on sale of equipment DR = 62700-10300 - 34920              17,480.00 To Equipment              62,700.00 d) Depreciation Dr                8,730.00 To Accumulated depreciation                8,730.00 (11640/12*9) Cash Dr              10,300.00 Accumulated depreciation Dr = 34920 + 8730              43,650.00 Loss on sale of equipment DR = 62700-10300 - 43650                8,750.00 To Equipment              62,700.00

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