Brief Exercise 1014 Vaughn Corporation owns machinery that c

Brief Exercise 10-14 Vaughn Corporation owns machinery that cost $22,800 when purchased on July 1, 2014. Depreciation has been recorded at a rate of $2,736 per year, resulting in a balance in accumulated depreciation of $9,576 at December 31, 2017. The machinery is sold on September 1, 2018, for $11,970. Prepare journal entries to (a) update depreciation for 2018 and (b) record the sale. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select \"No Entry\" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit Click if you would like to Show Work for this question: Open Show Work

Solution

a)

Total months from January to August = 08

Depreciation for 2018 = 2736*(8/12) = 1824

Journal:

Depreciation Dr 1824

Accumulated Depreciation Cr 1824

b)

Total accumulated depreciation = 9576+1824 = 11400

Book value of machinery = 22800-11400 = 11400

Sale value of machinery = 11970

Gain on sale of machinery = Sale value - Book value = 11970 - 11400 = 570

Journal:

Cash Dr 11970

Accumulated Depreciation Dr 11400

Machinery Cr 22800

Gain on sale of machinery Cr 570