Sheridan Company sells office equipment on July 31, 2017, for $20,320 cash. The office equipment originally cost $84,510 and as of January 1, 2017, had accumulated depreciation of $41,710. Depreciation for the first 7 months of 2017 is $3,670.

Prepare the journal entries to (a) update depreciation to July 31, 2017, and (b) record the sale of the equipment.

A.

Jul 31

Dr Depreciation expense 3,670

Cr Accumulated depreciation 3,670

b.

Jul-31

Dr Cash 22,320

Dr Accumulated depreciation 43,380

Dr Loss on disposal of Equipment 18,810

Cr Equipment 84,510

Explanation:

Sheridan Company Journal entries

a.

Jul-31

Dr Depreciation expense 3,670

Cr Accumulated depreciation 3,670

(To record depreciation for 7 months)

b.

Jul-31

Dr Cash 22,320

Dr Accumulated depreciation 43,380

Dr Loss on disposal of Equipment 18,810

Cr Equipment 84,510

(To record disposal of equipment)

Loss on disposal of Equipment

$84,510-$20,320=$64,190

$64,190-$41,710=$22,480

$22,480-$3,670=$18,810