Pryce Company owns equipment that cost $62,100 when purchased on January 1, 2014

Question

Pryce Company owns equipment that cost $62,100 when purchased on January 1, 2014. It has been depreciated using the straight-line method based on estimated salvage value of $4,900 and an estimated useful life of 5 years.

Prepare Pryce Company’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 0 for the amounts.)

No.

Account Titles and Explanation

Debit

Credit

(To record depreciation)

(To record sale of equipment)

(To record depreciation)

(To record sale of equipment)

(a) Sold for $29,320 on January 1, 2017. (b) Sold for $29,320 on May 1, 2017. (c) Sold for $10,500 on January 1, 2017. (d) Sold for $10,500 on October 1, 2017.

Explanation / Answer

Journal entries :

Date accounts & explanation debit credit a) Accumlated depreciation a/c (62100-4900/5)*3 34320 Cash a/c 29320 Gain on sale of equipment 1540 Equipment a/c 62100 (To record sale of equipment) b) Depreciation expenses a/c (62100-4900/5)*4/12 3813 Accumlated depreciation a/c 3813 (To record depreciation) Cash a/c 29320 Accumlated depreciation 38133 Gain on sale of equipment 5353 Equipment a/c 62100 (To record sale of equipment) C) Cash a/c 10500 Accumlated depreciationa/c 34320 Loss on sale of equipment a/c 17280 Equipment a/c 62100 (To record sale of equipment) D) Depreciation expenses a/c 8580 Accumlated depreciation 8580 (To record depreciation) Cash a/c 10500 Accumlated depreciation 42900 Loss on sale of equipment 8700 Equipment a/c 62100 (To record sale of equipment)

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