Question

In: Accounting

Sale of Plant Asset Lone Pine Company has a machine that originally cost $60,000. Depreciation has...

Sale of Plant Asset

Lone Pine Company has a machine that originally cost $60,000. Depreciation has been recorded for four years using the straight-line method, with a $5,000 estimated salvage value at the end of an expected ten-year life. After recording depreciation at the end of four years, Lone Pine sells the machine. Prepare the journal entry to record the machine’s sale for (Round to the nearest dollar):

a.	$39,000	cash
b.	$38,000	cash
c.	$28,000	cash

Expert Solution

Annual depreciation = (Cost price - Salvage value)/Useful life

= (60,000 - 5,000)/10

= $5,500

Accumulated depreciation for 4 year = 5,500 x 4

= $22,000

Book value of equipment after 4 year = Cost price - Accumulated depreciation

= 60,000 - 22,000

= $38,000

a) Gain on disposed = sale price of equipment - Book value of equipment

= 39,000- 38,000

= $1,000

Journal

Account Title and Explanation	Debit	Credit
Cash	39,000
Accumulated depreciation - equipment	22,000
Equipment		60,000
Gain on disposed		1,000

b) Since the equipment was sold for $38,000 i.e. at it book value, hence there was no gain or loss on the disposed of equipment.

Journal

Account Title and Explanation	Debit	Credit
Cash	38,000
Accumulated depreciation - equipment	22,000
Equipment		60,000

c)Loss on disposal = Book value of equipment - Sale price of equipment

= 38,000 - 28,000

= $10,000

journal

Account Title and Explanation	Debit	Credit
Cash	28,000
Accumulated depreciation - equipment	22,000
Loss on disposal	10,000
Equipment		60,000

kindly give a positive rating if you are satisfied with the solution. Please ask if you have any query related to the question, Thanks.

ekkarill92 answered 1 year ago

E 9-7A. Sale of Plant Asset Raine Company has a machine that originally cost $58,000. Depreciation has...

E 9-7A. Sale of Plant Asset Raine Company has a machine that originally cost $58,000. Depreciation has been recorded for four years using the straight-line method, with a $5,000 estimated salvage value at the end of an expected ten-year life. After recording depreciation at the end of four years, Raine sells the machine. Prepare the journal entry to record the machine's sale for: a. $37,000 cash b. $36,800 cash c. $28,000 cash Debit Account Credit Account Debit Amount Credit Amount a. Debit Account...

Sale of Plant Asset Shannon Company has a equipment that originally cost $68,000. Depreciation has been...

Sale of Plant Asset Shannon Company has a equipment that originally cost $68,000. Depreciation has been recorded for six years using the straight-line method, with a $9,000 estimated salvage value at the end of an expected eight-year life. After recording depreciation at the end of six years, Shannon sells the equipment. Prepare the journal entry to record the equipment’s sale for (Round to the nearest dollar): a. $30,000 cash b. $23,750 cash c. $21,000 cash General Journal Date Description Debit...

Sale of Plant Asset Noble Company has a equipment that originally cost $65,000. Depreciation has been...

Sale of Plant Asset Noble Company has a equipment that originally cost $65,000. Depreciation has been recorded for six years using the straight-line method, with a $9,000 estimated salvage value at the end of an expected eight-year life. After recording depreciation at the end of six years, Noble sells the equipment. Prepare the journal entry to record the equipment’s sale for (Round to the nearest dollar): a. $28,000 cash b. $23,000 cash c. $19,000 cash General Journal Date Description Debit...

An asset has an initial cost of $60,000, a salvage value of $5,000, and a depreciation...

An asset has an initial cost of $60,000, a salvage value of $5,000, and a depreciation life of 6 years. a) Determine the book value for year 3 using sum-of-the-years-digits depreciation. b) Determine the depreciation for year 3 using double declining balance depreciation. c) Determine the equivalent annual capital recovery plus a 12% return for year 3, assuming declining balance depreciation.

Disposal of Plant Asset Citano Company has a used executive charter plane that originally cost $850,000....

Disposal of Plant Asset Citano Company has a used executive charter plane that originally cost $850,000. Straight-line depreciation on the plane has been recorded for six years, with a $70,000 expected salvage value at the end of its estimated eight-year useful life. The last depreciation entry was made at the end of the sixth year. Eight months into the seventh year, Citano disposes of the plane. Required Prepare journal entries to record: a. Depreciation expense to the date of disposal....

Disposal of Plant Asset Canyon Company has a used delivery truck that originally cost $54,200. Straight-line...

Disposal of Plant Asset Canyon Company has a used delivery truck that originally cost $54,200. Straight-line depreciation on the truck has been recorded for three years, with a $2,000 expected salvage value at the end of its estimated six-year useful life. The last depreciation entry was made at the end of the third year. Four months into the fourth year, Canyon disposes of the truck. Required Prepare journal entries to record: a. Depreciation expense to the date of disposal. b....

Disposal of Plant Asset Canyon Company has a used delivery truck that originally cost $27,200. Straight-line...

Disposal of Plant Asset Canyon Company has a used delivery truck that originally cost $27,200. Straight-line depreciation on the truck has been recorded for three years, with a $2,000 expected salvage value at the end of its estimated six-year useful life. The last depreciation entry was made at the end of the third year. Four months into the fourth year, Canyon disposes of the truck. Required Prepare journal entries to record: a. Depreciation expense to the date of disposal. b....

Concord Company has an old factory machine that cost $58,000. The machine has accumulated depreciation of...

Concord Company has an old factory machine that cost $58,000. The machine has accumulated depreciation of $32,480. Concord has decided to sell the machine. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) What entry would Concord make to record the sale of the machine for $29,480 cash? (b) What entry would Concord make to record...

Bramble Company has an old factory machine that cost $65,000. The machine has accumulated depreciation of...

Bramble Company has an old factory machine that cost $65,000. The machine has accumulated depreciation of $36,400. Bramble has decided to sell the machine. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) What entry would Bramble make to record the sale of the machine for $33,400 cash? (b) What entry would Bramble make to record...

Depreciation by Two Methods; Sale of Fixed Asset New lithographic equipment, acquired at a cost of...

Depreciation by Two Methods; Sale of Fixed Asset New lithographic equipment, acquired at a cost of $718,750 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $61,800. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On March 4 of Year 5, the equipment was sold for $105,300. Required: 1. Determine the annual depreciation expense...