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20 January, 10:49

Sandhill Co. sells office equipment on July 31, 2022, for $22,430 cash. The office equipment originally cost $77,870 and as of January 1, 2022, had accumulated depreciation of $36,830. Depreciation for the first 7 months of 2022 is $4,580. Prepare the journal entries to (a) update depreciation to July 31, 2022, and (b) record the sale of the equipment

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  1. 20 January, 11:28
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    (a)

    July 31, 2022

    Dr. Depreciation Expense $4,580

    Cr. Accumulated Depreciation $4,580

    (b)

    Dr. Cash $22,430

    Dr. Accumulated Depreciation $41,410

    Dr. Loss on Sale of asset $14,030

    Cr. Cost $77,870

    Explanation:

    Before sale of the asset, depreciation for the year should be recorded. To incorporate its effect on the sale. The depreciation for the 7 months of 2022 will be added to the accumulated depreciation account.

    July 31, 2022

    Accumulated Depreciation = $36,830 + $4,580 = $41,410

    Net Loss is calculated by deducting the accumulated depreciation and cash received on the sale from the original cost of the asset.
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