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In: Accounting

Sale of Plant Asset Noble Company has a equipment that originally cost $65,000. Depreciation has been...

Sale of Plant Asset Noble Company has a equipment that originally cost $65,000. Depreciation has been recorded for six years using the straight-line method, with a $9,000 estimated salvage value at the end of an expected eight-year life. After recording depreciation at the end of six years, Noble sells the equipment. Prepare the journal entry to record the equipment’s sale for (Round to the nearest dollar): a. $28,000 cash b. $23,000 cash c. $19,000 cash General Journal Date Description Debit Credit a. Cash Equipment To record sale of equipment. b. Cash To record sale of equipment. c. Cash Accumulated Depreciation - Equipment To record sale of equipment.

Solutions

Expert Solution

  • Workings

A

Cost

$            65,000.00

B

Residual Value

$              9,000.00

C=A - B

Depreciable base

$            56,000.00

D

Life [in years]

8

E=C/D

Annual SLM depreciation

$              7,000.00

Year

Book Value

Depreciation expense

Ending Book Value

Accumulated Depreciation

1

$              65,000.00

$              7,000.00

$         58,000.00

$                7,000.00

2

$              58,000.00

$              7,000.00

$         51,000.00

$             14,000.00

3

$              51,000.00

$              7,000.00

$         44,000.00

$             21,000.00

4

$              44,000.00

$              7,000.00

$         37,000.00

$             28,000.00

5

$              37,000.00

$              7,000.00

$         30,000.00

$             35,000.00

6

$              30,000.00

$              7,000.00

$         23,000.00

$             42,000.00

  • [a]

Accounts Titles

Debit

Credit

Cash

$     28,000.00

   Accumulated Depreciation - Equipment

$     42,000.00

   Gain on sale/disposal

$      5,000.00

   Equipment

$    65,000.00

(to record sale)

  • [b]

Accounts Titles

Debit

Credit

Cash

$     23,000.00

   Accumulated Depreciation - Equipment

$     42,000.00

   Equipment

$    65,000.00

(to record sale)

  • [c]

Accounts Titles

Debit

Credit

Cash

$     19,000.00

   Accumulated Depreciation - Equipment

$     42,000.00

Loss on sale/disposal

$       4,000.00

   Equipment

$    65,000.00

(to record sale)

ekkarill92 answered 2 years ago
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