Question

Sheridan Corporation owns machinery that cost $21,200 when purchased on July 1, 2017. Depreciation has been recorded at a rate of $2,544 per year, resulting in a balance in accumulated depreciation of $8,904 at December 31, 2020. The machinery is sold on September 1, 2021, for $11,130.

Prepare journal entries to (a) update depreciation for 2021 and (b) record the sale.

Answer 1

Solution

Transaction	General Journal	Debit	Credit
a	Depreciation expense	$            1,696
	Accumulated Depreciation		$            1,696
	(To record depreciatio expense)
b	Cash	$          11,130
	Accumulated Depreciation-Equipment	$          10,600
	Gain on sale of Asset		$                530
	Asset		$          21,200
	(To record sale of Equipment)

Working

Cost	$ 21,200.00
Accumulated depreciation (8904+1696)	$ 10,600.00
Book value	$ 10,600.00
Sales price	$ 11,130.00
Book value	$ 10,600.00
Gain /(loss)	$        530.00