Brown Company purchased equipment in 2010 for $150000 and estimated a $10000 salvage value at the end of the equipment's 10-year useful life. At December 31 2016 there was $98000 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31 2017 the equipment was sold for $40000.
Prepare the appropriate journal entries to remove the equipment from the books of Brown Company on March 31 2017.
(b) Finney Company sold a machine for $15000. The machine originally cost $35000 in 2014 and $8000 was spent on a major overhaul in 2017 (charged to the Equipment account). Accumulated Depreciation on the machine to the date of disposal was $28000.
Prepare the appropriate journal entry to record the disposition of the machine.
(c) Stanley Company sold office equipment that had a book value of $12000 for $16000. The office equipment originally cost $40000 and it is estimated that it would cost $50000 to replace the office equipment.
Prepare the appropriate journal entry to record the disposition of the office equipment.

Question

shalini gupta · Accepted Answer

Final Answer :  (b)  Cash  15 , 000  Accumulated Depreciation-Equipment 28 , 000  Equipment  43 , 000 (To record disposition of machine at book value)  \begin{array}{lrr}  	ext { Cash }  & 15,000\ 	ext {  Accumulated Depreciation-Equipment}  & 28,000\ 	ext { Equipment }  & & 43,000\ 	ext {(To record disposition of machine at book value)  }  & \end{array}  Cash   Accumulated Depreciation-Equipment  Equipment  (To record disposition of machine at book value)  ​ 15 , 000 28 , 000 ​ 43 , 000 ​ (c)  Cash.  16 , 000  Accumulated Depreciation-Equipment  28 , 000  Equipment 40 , 000  Gain on Disposal of Plant Assets  4 , 000  (To record disposal of office equipment at a gain)  \begin{array}{lrr}  	ext { Cash. }  & 16,000\ 	ext {  Accumulated Depreciation-Equipment }  & 28,000\ 	ext {  Equipment}  & & 40,000\ 	ext { Gain on Disposal of Plant Assets }  & & 4,000\ 	ext { (To record disposal of office equipment at a gain) }  & \end{array}  Cash.   Accumulated Depreciation-Equipment   Equipment  Gain on Disposal of Plant Assets   (To record disposal of office equipment at a gain)  ​ 16 , 000 28 , 000 ​ 40 , 000 4 , 000 ​

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