Question

Whispering Winds Corporation owns equipment that cost $64,800 when purchased on April 1, 2013. Depreciation has been recorded at a rate of $10,800 per year, resulting in a balance in accumulated depreciation of $51,300 at December 31, 2017. The equipment is sold on July 1, 2018, for $12,960. Prepare journal entries to (a) update depreciation for 2018 and (b) record the sale

Answer 1

(a) update depreciation for 2018

Debit ; Depreciation $10,800

Credit Accumulated Depreciation $10,800

(b) record the sale

Debit : Cash $12,960

Debit : Accumulated Depreciation $62,100

Credit : Profit and Loss $10,260

Credit : Equipment at Cost $64,800

Step-by-step explanation:

(a) update depreciation for 2018

Recognize deprecation

(b) record the sale

Recognize proceeds from sale and profit or loss from sale