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11 February, 06:53

Gunkelson Company sells equipment on September 30, 2015, for $18,010 cash. The equipment originally cost $71,880 and as of January 1, 2015, had accumulated depreciation of $42,260. Depreciation for the first 9 months of 2015 is $5,480. Prepare the journal entries to (a) update depreciation to September 30, 2015, and (b) record the sale of the equipment.

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  1. 11 February, 07:54
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    a. The journal entries to update depreciation to September 30, 2015:

    Debit Depreciation Expense $5,480

    Credit Accumulated depreciation account $5,480

    b.

    Debit Cash $18,010

    Debit Accumulated depreciation account $47,740

    Debit Loss on asset disposal $6,130

    Credit Equipment asset $71,880

    Explanation:

    a. The journal entries to update depreciation to September 30, 2015:

    Debit Depreciation Expense $5,480

    Credit Accumulated depreciation account $5,480

    b.

    Accumulated depreciation account at September 30, 2015 = $42,260 + $5,480 = $47,740

    The carrying amount of the equipment = The equipment originally cost - Accumulated depreciation = $71,880 - $47,740 = $24,140

    Sale price - Carrying amount of the asset = $18,010 - $24,140 = - $6,130 <0

    => The company recognizes loss on disposal $6,130

    The entry:

    Debit Cash $18,010

    Debit Accumulated depreciation account $47,740

    Debit Loss on asset disposal $6,130

    Credit Equipment asset $71,880
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Home » Business » Gunkelson Company sells equipment on September 30, 2015, for $18,010 cash. The equipment originally cost $71,880 and as of January 1, 2015, had accumulated depreciation of $42,260. Depreciation for the first 9 months of 2015 is $5,480.
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