Question
In: Accounting
equipment costing $60,000 with a book value of $16,000 is sold for $21,000 which journal entry...
equipment costing $60,000 with a book value of $16,000 is sold for $21,000 which journal entry is used to record the sale?
Solutions
Expert Solution
Journal Entry to Record the Sale of Equipment
| S.No. | Particulars | Debit | Credit |
| 1 | Cash / Bank A/C..Dr | 21,000 | |
| Accumulated Depreciation on Equipment A/C..Dr | 44,000 | ||
| To Equipment A/C | 60,000 | ||
| To Gain on Sale of Equipment | 5,000 | ||
| (Being Sale of Equipment Recorded) |
Supporting Work and Explanation:-
As the Asset which was purchased for $ 60,000 is now of $ 16,000 because the value of Equipment has been depreciated due to continuous use of Equipment and the wear and tear of Asset.
As the Equipment which is having value of $ 16,000 have been sold for $ 21,000 which means there is gain on sale of Equipment because the Equipment has ben sold for amount more than its current book value.
The following Amount are Calculated for the completion of Journal Entry of Sale
Accumulated Depreciation on Equipment = Cost of Equipment - Book Value of Equipment
Book Value of Equipment = $ 16,000
Cost of Equipment = $ 60,000
Accumulated Depreciation on Equipment = 60,000 - 16,000
Accumulated Depreciation on Equipment = 44,000
Gain on Sale of Equipment = Sales Price of Equipment - Book Value of Equipment
Sales Price of Equipment = $ 21,000
Book Value of Equipment = $ 16,000
Gain on Sale of Equipment = 21,000 - 16,000
Gain on Sale of Equipment = $ 5,000
ekkarill92 answered 2 years agoRelated Solutions
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BRAND purchased equipment for $290,000 cash, sold equipment costing $150,000 with a book value of $100,000,...
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