Question

On July 1, 2022, Cullumber Company sells equipment for $146000. The equipment originally cost $480000, had an estimated 5-year life and an expected salvage value of $50000. The Accumulated Depreciation account had a balance of $301000 on January 1, 2022, using the straight-line method. The gain or loss on disposal is

Answer 1

Answer:

Accumulated depreciation = ($480,000 - $50,000)/5 *6/12 + $301,000

Accumulated depreciation = $43,000 + $301,000

Accumulated depreciation = $344,000

Date  Account titles & Explanations           Debit           Credit

         Cash                                                  $146,000

         Accumulated depreciation              $344,000

                 Gain on disposal                                             $10,000

                 Equipment                                                       $480,000

So, the gain on disposal is $10,000