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Concord Corporation owns machinery that cost $26,400 when purchased on July 1, 2017. Depreciation has been...

Concord Corporation owns machinery that cost $26,400 when purchased on July 1, 2017. Depreciation has been recorded at a rate of $3,168 per year, resulting in a balance in accumulated depreciation of $11,088 at December 31, 2020. The machinery is sold on September 1, 2021, for $6,864.

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

Solutions

Expert Solution

(a) Depreciation for 2021:

Entry:

Depreciation a/c              Dr      $ 2112

          To Asset a/c                             $ 2112

(being depreciation charged to asset for 8 months)

Calculation:

Annual depreciation= $ 3168

= $3168*8months/12 months

= $ 2112

(B) Asset value as on Sept 1st 2021:

= $ 26400 -$ 11088+$2112

= $13200

Asset sold for = $ 6864

Loss on sale=$13200-$6864

=$6336

Entry:

Cash a/c               Dr      $6864

Loss on sale a/c    Dr      $6336

                   To Asset a/c          $13200

(Being asset sold for loss of $6336)

ekkarill92 answered 1 year ago
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