Ask Question
14 October, 21:31

Garcia Co. owns equipment that cost $76,800, with accumulated depreciation of $40,800. Record the sale of the equipment under the following three separate cases assuming Garcia sells the equipment for (1) $47,000 cash, (2) $36,000 cash, and (3) $31,000 cash.

+3
Answers (1)
  1. 14 October, 23:54
    0
    1. Cash Debit $ 47,000

    Accumulated Depreciation equipment Debit $ 40,800

    Gain on sale of equipment Credit $ 11,000

    Equipment Credit $ 76,800

    To record sale of equipment for $ 47,000 and gain on sale of $ 11,000

    2. Cash Debit $ 36,000

    Accumulated Depreciation equipment Debit $ 40,800

    Equipment Credit $ 76,800

    To record sale of equipment for $ 36,000

    3. Cash Debit $ 31,000

    Accumulated Depreciation equipment Debit $ 40,800

    Loss on sale of equipment Debit $ 5,000

    Equipment Credit $ 76,800

    To record sale of equipment for $ 31,000 and loss on sale of $ 5,000

    Explanation:

    Computation of net book value

    Cost of equipment $ 76,800

    Less: Accumulated depreciation $ 40,800

    Net book value $ 36,000

    In first scenario where the equipment is sold of $ 47,000, the differential between the sale value and the net book value is the gain on sale and is credited in the accounting entry.

    In the second scenario, where the equipment is sold for $ 36,000, the sale proceeds is exactly equal to the net book value and no gain or loss is recorded.

    In the third scenario, the equipment is sold for $ 31,000 and the differential between the net book value and the sale proceeds is a loss and recorded as a debit in the accounting entry.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Garcia Co. owns equipment that cost $76,800, with accumulated depreciation of $40,800. Record the sale of the equipment under the following ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers