Question

Skysong, Inc. sells equipment on September 30, 2019, for $17,400 cash. The equipment originally cost $72,400 and as of January 1, 2019, had accumulated depreciation of $42,300. Depreciation for the first 9 months of 2019 is $5,250. Prepare the journal entries to (a) update depreciation to September 30, 2019, and (b) record the sale of the equipment.

Answer 1

Step-by-step explanation:

The journal entries are shown below:

a. Depreciation Expense A/c Dr $5,250

To Accumulated Depreciation - Equipment A/c $5,250

(Being depreciation expense is recorded)

b. Cash A/c Dr $17,400

Accumulated Depreciation - Equipment A/c $47,550

Loss on Disposal of Equipment $7,450

To Equipment A/c $72,400

(Being sale of machinery is recorded and the remaining balance is credited to the Loss on Disposal of Equipment A/c)

The accumulated depreciation is computed below:

= $42,300 + $5,250

= $47,550