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As of 12/31/2018, a company reports the following after making adjusting entries. Equipment $50,000 debit. Total...

As of 12/31/2018, a company reports the following after making adjusting entries.
Equipment $50,000 debit.
Total accumulated depreciation deprciation is $16000

For each of the following situations record the journal entries necessary:
1a. The equipment is sold for 22,000 in cash in 2019

1b. The equipment is sold for 48,000. The company receives a note receivable from the purchaser in 1/1/19

1c. The equipment falls apart and cannot be fixed. It is thrown away on 1/1/19

Expert Solution

1a) Journal Entry

General Journal	Debit	Credit
Cash	$22000
Accumulated Depreciation	$16000
Loss on Sale of Equipment	$12000
Equipment		$50,000

Given that the Balance of Equipment on 12/31/2018 is $50,000 Accumulated Depreciation = $16000

Book Value of Asset = $50,000 - $16,000

Book Value of Equipment = $34,000

Equipment is Sold for $22,000

Loss on Sale of equipment = $34,000 - $22,000 = $12,000

1b) Journal Entry

General Journal	Debit	Credit
Note Receivable	$48,000
Accumulated Depreciation	$16000
Gain on Sale of Equipment		$14000
Equipment		$50,000

Given that the Balance of Equipment on 12/31/2018 is $50,000 Accumulated Depreciation = $16000

Book Value of Asset = $50,000 - $16,000

Book Value of Equipment = $34,000

Equipment is Sold for $48,000

Gain on Sale of Equipment = $48,000 - $34,000 = $14,000

1c) Journal Entry

General Journal	Debit	Credit
Accumulated Depreciation	$16000
Loss on disposal of Equipment	$34000
Equipment		$50,000

Note : Book Value of asset on 01/01/19 is $34,000 and nothing can be realised from the equipment as it is thrown away so the amount is transferred to loss on disposal acccount.

ekkarill92 answered 2 years ago

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