Computer equipment office equipment purchased 6 12 years ago

Computer equipment (office equipment) purchased 6 1/2 years ago for $170,000, with an estimated life of 8 years and a residual value of $10,000, is now sold for $60,000 cash. (Appropriate entries for depreciation had been made for the first six years of use.) Journalize the following entries: Record the depreciation for the one-half year prior to the sale, using the straight-line method. (a) (b) Record the sale of the equipment (c) Assuming that the equipment had been sold for $30,000 cash, prepare the entry for (b) above to record the sale

Solution

Journal entry :

No	Accounts & explanation	debit	credit
a	Depreciation expense (170000-10000/8)*6/12	10000
	Accumlated depreciation		10000
	(To record depreciation)
b	Cash	60000
	Accumlated depreciation (20000*6+10000)	130000
	Gain on sale of equipment		20000
	Equipment		170000
	(To record sale of equipment)
c	Cash	30000
	Accumlated depreciation	130000
	Loss on sale of equipment	10000
	Equipment		170000
	(To record sale of equipment)