194k views
25 votes
Pina Colada Corporation owns equipment that cost $57,600 when purchased on April 1, 2013. Depreciation has been recorded at a rate of $9,600 per year, resulting in a balance in accumulated depreciation of $45,600 at December 31, 2017. The equipment is sold on July 1, 2018, for $11,520. Prepare journal entries to (a) update depreciation for 2018 and (b) record the sale. (

User Trisia
by
8.6k points

1 Answer

9 votes

Answer:

a. Annual depreciation expense = $9,600. Depreciation expense for the year 2018 (6 months) = $9,600*6/12 = $4,800

Date Account Titles and Explanation Debit Credit

Depreciation expense $4,800

Accumulated depreciation- Equipment $4,800

(To record depreciation expense)

b. Accumulated depreciation till December 31, 2017 = $45,600

Accumulated depreciation at July 1, 2018 = Accumulated depreciation till December 31, 2017 + Depreciation expense for the year 2018 = $45,600 + $4,800 = $50,400

Cost of equipment = $57,600

Book value of equipment = Cost of equipment - Accumulated depreciation at July 1, 2018 = $57,600 - $50,400 = $7,200

Sale price of equipment = $11,520

Gain on sale of equipment = Sale price of equipment- Book value of equipment = $11,520 - $7,200 = $4,320

Date Account Titles and Explanation Debit Credit

Cash $11,5200

Accumulated depreciation- equipment $50,400

Gain on sale of equipment $4,320

Equipment $57,600

(To record sale of equipment)

User Hgminh
by
7.7k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories