Question
In: Accounting
logan's Landscaping purchased a tractor at a cost of $35,000 and sold it three years later...
logan's Landscaping purchased a tractor at a cost of $35,000 and sold it three years later for $10,000. Landscaping recorded deprecation using the straight-line method, a five-year service life, and a 5000 residue little value. Factors are included in the equipment account. The journal entry to record the sale would include
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Entry will include
Debit of cash by $10,000
Debit accumulated depreciation by $18,000
Debit of Loss on sale of equipment by $7,000
Credit of Equipment by $35,000
.
Working
| Straight line | |
| Cost | $ 35,000.00 |
| Accumulated depreciation | $ 18,000.00 |
| Book value | $ 17,000.00 |
| Sales price | $ 10,000.00 |
| Book value | $ 17,000.00 |
| Gain /(loss) | $ (7,000.00) |
Entry for sale is
| General Journal | Debit | Credit |
| Cash | $ 10,000 | |
| Accumulated Depreciation-Equipment | $ 18,000 | |
| Loss on sale of Equipment | $ 7,000 | |
| Equipment | $ 35,000 | |
| (To record sale of Equipment) |
.
| Straight line Method | ||
| A | Cost | $ 35,000 |
| B | Residual Value | $ 5,000 |
| C=A - B | Depreciable base | $ 30,000 |
| D | Life [in years left ] | 5 |
| E=C/D | Annual SLM depreciation | $ 6,000 |
.
| Depreciation schedule-Straight line method | ||||
| Year | Book Value | Depreciation expense | Accumulated Depreciation | Ending Book Value |
| 1 | $ 35,000.00 | $ 6,000.00 | $ 6,000.00 | $ 29,000.00 |
| 2 | $ 29,000.00 | $ 6,000.00 | $ 12,000.00 | $ 23,000.00 |
| 3 | $ 23,000.00 | $ 6,000.00 | $ 18,000.00 | $ 17,000.00 |
ekkarill92 answered 1 month agoRelated Solutions
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