If Pryce Company owns equipment that cost $65,000 when purchased on January 1, 2012. It has been depreciated using the straight-line method based on an estimated salvage value of $5,000 and an estimated useful life of 5 years. Prepare Pryce Company's journal entries to record the sale of the equipment in these four independent situations.
Pryce Company's journal entries
(a) Sold for $31,000 on January 1, 2015
Jan 1, 2015
Debit Cash $31,000
Debit Accumulated Depreciation- Equipment $36,000
[($65,000-$5,000)/5 × 3]
Credit Equipment $65,000
Credit Gain on sale of Equipment $2,000
($31,000+$36,000-$65,000)
(To record sales of equipment)
(b) Sold for $31,000 on May 1, 2015
May 1, 2015
Debit Depreciation Expense $4,000
Credit Accumulated Depreciation- Equipment $4,000
[($65,000-$5,000)/5 × 4/12]
(To record depreciation expense)
May 1, 2015
Debit Cash $31,000
Debit Accumulated Depreciation- Equipment $40,000
($36,000+$4,000)
Credit Equipment $65,000
Credit Gain on sale of Equipment $6,000
($31,000+$40,000-$65,000)
(To record sale of equipment)
(c) Sold for $11,000 on January 1, 2015
Jan 1, 2015
Debit Cash $11,000
Debit Accumulated Depreciation- Equipment $36,000
[($65,000-$5,000)/5 × 3]
Debit Loss on sale of Equipment $18,000
($65,000-$11,000-$36,000)
Credit Equipment $65,000
(To record sales of equipment)
(d) Sold for $11,000 on October 1, 2015
Oct 1, 2015
Debit Depreciation Expense $9,000
Credit Accumulated Depreciation- Equipment $9,000
[($65,000-$5,000)/5 × 9/12]
(To record depreciation expense)
Oct 1, 2015
Debit Cash $11,000
Debit Accumulated Depreciation- Equipment $45,000
($36,000+$9,000)
Debit Loss on sale of Equipment $9,000
($65,000-$11,000-$45,000)
Credit Equipment $65,000
(To record sales of equipment)
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