Question

Sheridan Company sells office equipment on July 31, 2022, for $20,320 cash. The office equipment originally cost $84,510, and as of January 1, 2022, had accumulated depreciation of $41,710. Depreciation for the first 7 months of 2022 is $3,670.

Answer 1

The Sheridan Company experienced an $18,810 loss on the sale of their office equipment after accounting for the original cost, accumulated depreciation, and the sale price.

Step-by-step explanation:

The question is concerning the calculation of loss or gain on the sale of office equipment in the context of business accounting. When the Sheridan Company sold their office equipment for $20,320 cash, they had an original cost of $84,510 and an accumulated depreciation as of January 1, 2022, of $41,710. Additionally, the equipment was further depreciated by $3,670 during the first 7 months of 2022. The total depreciation before the sale would be the sum of $41,710 and $3,670, giving $45,380. The book value of the equipment at the time of sale would then be the original cost of $84,510 minus the total accumulated depreciation of $45,380, resulting in $39,130. Since it sold for $20,320, Sheridan Company would have experienced a loss calculated by subtracting the sale price from the book value, which is $39,130 - $20,320 = $18,810 loss.