Abbott Landscaping purchased a tractor at a cost of $36,000 and sold it three ye
ID: 2555950 • Letter: A
Question
Abbott Landscaping purchased a tractor at a cost of $36,000 and sold it three years later for $18,000. Abbott recorded depreciation using the straight-line method, a five-year service life, and a $2,000 residual value. Tractors are included in the Equipment account. References Section Break Exercise 7-17 Record the sale of equijpment (LO7-6) 10. Required information 5.00 points Exercise 7-17 Part 1 Required: 1. Record the sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet Record the sale of equipment Note: Enter debits before credits. Debit CreditExplanation / Answer
Answer
Working
Working for Answer 1
Working for Answer 2
A
Tractor Cost
$ 36,000.00
$ 36,000.00
B
Salvage Value
$ 2,000.00
$ 2,000.00
C=A-B
Depreciable base
$ 34,000.00
$ 34,000.00
D
Useful Life
5
5
E=C/D
SLM Annual Depreciation
$ 6,800.00
$ 6,800.00
F=E x 3 years
Total 3 year depreciation
$ 20,400.00
$ 20,400.00
G=A-F
Book Value at the time of Sale
$ 15,600.00
$ 15,600.00
H
Sold for
$ 18,000.00
$ 11,200.00
I=H-G
Gain or (Loss) On Sale
$ 2,400.00
$ (4,400.00)
Transaction
General Journal
Debit
Credit
1
Cash [cash received]
$ 18,000.00
Accumulated Depreciation-Equipment [3 years depreciation]
$ 20,400.00
Gain on Sale of Equipment
$ 2,400.00
Equipment [original cost]
$ 36,000.00
(asset sold)
Transaction
General Journal
Debit
Credit
1
Cash [cash received]
$ 11,200.00
Accumulated Depreciation-Equipment [3 years depreciation]
$ 20,400.00
Loss on Sale of Equipment
$ 4,400.00
Equipment [original cost]
$ 36,000.00
(asset sold)
Working
Working for Answer 1
Working for Answer 2
A
Tractor Cost
$ 36,000.00
$ 36,000.00
B
Salvage Value
$ 2,000.00
$ 2,000.00
C=A-B
Depreciable base
$ 34,000.00
$ 34,000.00
D
Useful Life
5
5
E=C/D
SLM Annual Depreciation
$ 6,800.00
$ 6,800.00
F=E x 3 years
Total 3 year depreciation
$ 20,400.00
$ 20,400.00
G=A-F
Book Value at the time of Sale
$ 15,600.00
$ 15,600.00
H
Sold for
$ 18,000.00
$ 11,200.00
I=H-G
Gain or (Loss) On Sale
$ 2,400.00
$ (4,400.00)
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