Exercise 10-10 Pryce Company owns equipment that cost $69,500 when purchased on January 1, 2014. It...

Exercise 10-10 Pryce Company owns equipment that cost $69,500 when purchased on January 1, 2014. It has been depreciated using the straight-line method based on estimated salvage value of $3,200 and an estimated useful life of 5 years.

Prepare Pryce Company’s journal entries to record the sale of the equipment in these four independent situations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g.125. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(a) Sold for $34,780 on January 1, 2017.

(b) Sold for $34,780 on May 1, 2017.

(d) Sold for $10,800 on October 1, 2017. No. Account Titles and Explanation Debit Credit

Solutions

Expert Solution

	Straight line depreciation = (initial cost - salvage value ) / life of asset

	Initial cost	69500
	Salvage value	3200
	Life of asset	5

	Straight line depreciation per year	13260	(69500-3200)/5

a	Depreciation for 3 years 13260*3	39780

	Cost of assets	69500
	Accumulated depreciation at jan 1 2017	39780	(13260*3)
	Book value at jan 1 2017	29720
	Sales proceeds	34780
	Profit on sale of equipment	5060

	Cash	34780
	Accumulated depreciation	39780
	Equipment		69500
	Profit on sale of equipment		5060

b
	Cost of assets	69500
	Accumulated depreciation at May 1 2017	44200	(132603+132604/12)
	Book value at jan 1 2017	25300
	Sales proceeds	34780
	Profit on sale of equipment	9480

	Cash	34780
	Accumulated depreciation	44200
	Equipment		69500
	Profit on sale of equipment		9480


c	Cost of assets	69500
	Accumulated depreciation at jan 1 2017	39780	(13260*3)
	Book value at jan 1 2017	29720
	Sales proceeds	10800
	Loss on sale of equipment	-18920

	Cash	10800
	Accumulated depreciation	39780
	Loss on sale of equipment	18920
	Equipment		69500

d	Cost of assets	69500
	Accumulated depreciation at May 1 2017	49725	(132603+132609/12)
	Book value at jan 1 2017	19775
	Sales proceeds	10800
	Loss on sale of equipment	-8975

	Cash	10800
	Accumulated depreciation	49725
	Loss on sale of equipment	8975
	Equipment		69500

ekkarill92 answered 11 months ago

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