Tamarisk Manufacturing has old equipment that cost $58,000. The equipment has accumulated depreciation of $27,200. Tamarisk...

Tamarisk Manufacturing has old equipment that cost $58,000. The equipment has accumulated depreciation of $27,200. Tamarisk has decided to sell 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.) (a) What entry would Tamarisk make to record the sale of the equipment for $32,000 cash? (b) What entry would Tamarisk make to record the sale of the equipment for $15,000 cash?

Expert Solution

Calcuation of book value of equipment

Book value = Cost of Equipment - Accumulated depreciation
= 58000-27200
=30800

Case A: sale of the equipment for $32,000 cash

	Account Title & Explanation	Debit	Credit

1	Cash	32000
	To Equipment		32000
	(Being equipment sold)


2	Equipment	1200
	To Profit on sale of equipment		1200
	(Being profit on sale of euipmenr recognised)

	Calculation of profit on sale of equipment

	Profit on sale of computer = Sale value - Book value
	= 32000-30800
	= 1200

Case B: sale of the equipment for $15,000 cash

	Account Title & Explanation	Debit	Credit

1	Cash	15000
	To Equipment		15000
	(Being equipment sold)


2	Loss on sale of equipment	15800
	To Equipment		15800
	(Being profit on sale of euipmenr recognised)

	Calculation of loss on sale of equipment

	Profit on sale of computer = Book value - Sale value
	= 30800-15000
	= 15800

ekkarill92 answered 1 month ago

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