Question

Equipment was purchased at a cost of $52,000. It had an estimated useful life of seven years and a residual value of $3,000. Assuming the equipment was sold at the end of Year 6 for $14,000, which of the following will be included in the journal entry? (Assume the straight-line depreciation method.)

Answer 1

a debit to Accumulated Depreciation—Equipment

Explanation:

we know that

Depreciation/year=(Cost-Residual value)/Useful life

put values

=(52000-3000)/7=$7000

Hence book value as on date of sale=52000-(7000*6)=$10000

Hence gain on sale=(14000-10000)=$4000

Hence the journal is :

Cash a/c..Dr$14000

Accumulated Depreciation..Dr$42000

To equipment $52000

To gain on sale $4000