Question

Cheyenne Corporation owns equipment that cost $49,200 when purchased on April 1, 2013. Depreciation has been recorded at a rate of $8,200 per year, resulting in a balance in accumulated depreciation of $38,950 at December 31, 2017. The equipment is sold on July 1, 2018, for $9,840. Prepare journal entries to

(a) update depreciation for 2018 and
(b) record the sale

Answer 1

Please see the answers below:

Step-by-step explanation:

(a)

Dated: July 1, 2018

Debit: Depreciation Expense $4,100

Credit: Accumulated Depreciation $4,100

To record Depreciation Expense for 6 months as the depreciation expense is $8,200 per year.

(b)

Dated: July 1, 2018

Debit: Cash $9,840

Debit: Accumulated Depreciation $43050

Credit: Gain on Sale $3690

Credit: Equipment $49,200

To record the sale of asset with Gain.