8-9a. Disposal of asset. Sellem, Inc. is disposing of office furniture it has had for 2...

8-9a. Disposal of asset. Sellem, Inc. is disposing of office furniture it has had for 2 ½ years. The cost of the furniture was $10,000, and Sellem estimated the salvage to be $2,000. A four-year life was expected.

1. Journalize the sale of the machine for $7,500.

2. Journalize the sale of the machine for $2,300.

3. Journalize the disposal if Sellem discarded the furniture.

Expert Solution

Original cost	10000
Less: Estimated salvage	2000
Depreciable cost	8000
Divide: Life	4
Annual depreciation	2000
Multiply: Yrars expired	2.5
Accumulated dep	5000
Book vallue (10000-5000)	5000

Req 1.
Gain on sale = 7500-5000 = 2500

Journal entry:
Accounts title and explanations		Debit $	Credit $
Cash account		7500
Accumulated depreciation-Equipment		5000
Equipment			10000
Gain on sale of Equipment			2500

Req 2.
Loss on sale = 5000-2300 = 2700

Journal entry:
Accounts title and explanations		Debit $	Credit $
Cash account		2300
Accumulated depreciation-Equipment		5000
Loss on sale of Equipment		2700
Equipment			10000

Req 3.
Journal entry:
Accounts title and explanations		Debit $	Credit $
Accumulated depreciation-Equipment		5000
Loss on disposal of assets		5000
Equipment			10000

ekkarill92 answered 3 years ago

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