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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Business

Emmy Price

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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Answers (1)

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Evie Rose · Answer 1

(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.