Question

In: Accounting

(b Stevenson Company purchased equipment for $250,000 on January 1, 2010. The estimated salvage value is...

(b Stevenson Company purchased equipment for $250,000 on January 1, 2010. The estimated salvage value is $50,000, and the estimated useful life is 5 years. The straight-line method is used for depreciation. On July 1, 2013 Stevenson sold the equipment for $100,000. The journal entry to record the sale of the equipment will include. (5 points)

A.

A debit to cash of $100,000, a credit to equipment of $250,000

B.

A credit to accumulated depreciation of $140,000

C.

A debit to cash of 250,000, a credit to equipment of $100,000

D.

A debit to equipment of 250,000, a credit to cash of $100,000

E.

None of the above

Expert Solution

Ans is A

A debit to cash of $100,000, a credit to equipment of $250,000

Working:-

Jan/1/2010
Cost	250000
Salvage value	50000
Useful life	5	years
Sale on July/1/2013
Straight line Depreciation


Year	Depreciation
2010	40000	(250000-50000)/5
2011	40000	(250000-50000)/5
2012	40000	(250000-50000)/5
2013 (6 months)	20000	(250000-50000)/5*1/2
Total	140000


Cost less depreciation value	110000	(250000-140000)

Sale price	100000

Loss on sale	10000	(110000-100000)

Entry
Cash acc Dr	100000
Loss on sale Dr	10000
Accumulated Depreciation Dr	140000
Equipment Account Cr		250000

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