Question

Sandhill Co. sells office equipment on July 31, 2022, for $23,500 cash. The office equipment originally cost $75,080 and as of January 1, 2022, had accumulated depreciation of $41,850. Depreciation for the first 7 months of 2022 is $3,850.Prepare the journal entries to (a) update depreciation to July 31, 2022, and (b) record the sale of the equipment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Answer and Explanation:

The Journal entry is shown below:-

a. Depreciation Expense A/c Dr $3,850

To Accumulated Depreciation $3,850

(Being depreciation expense is recorded)

b. Cash Dr $23,500

Accumulated Depreciation Dr, $$45,700

Loss on Disposal Dr, $5,880

To Office equipment $75,080

(Being sale of machinery is recorded and debited the rest amount to the loss on Disposal of office equipment)

Working Note

The accumulated depreciation is computed below:

= $41,850 + $3,850 = $45,700