Question

Connor Lamps Inc. purchased factory equipment in January 2015 for $575,000. In March 2018, this equipment was sold for $105,000 cash. At the date of sale, the accumulated depreciation account totaled $325,000. The journal entry to record this sale includes:

Answer 1

Loss on sale of equipment Dr $145,000

Step-by-step explanation:

The journal entry is shown below:

Cash Dr $105,000

Accumulated depreciation Dr $325,000

Loss on sale of equipment Dr $145,000

To Equipment $575,000

(Being the record of the equipment is recorded)

Since the equipment is sold for $105,000 due to which the cash is increased by $105,000 and there is a decrease in assets for $575,000 as this amount indicates the purchase value

Moreover, the accumulated depreciation is also debited for $325,000

And, the balancing figure would be transferred to loss on sale of equipment i.e $145,000