Answer:
Pharoah Company
General Journal
Debit Sale of Equipment $104,000
Credit Equipment account $104,000
To close the equipment account.
Debit Accumulated Depreciation $69,600
Credit Sale of Equipment $69,600
To close the accumulated depreciation account.
Debit Cash Account $21,000
Credit Sale of Equipment $21,000
To record the cash receipts from the sale.
Explanation:
a) Calculations:
Purchase price = $104,000
Salvage value = $8,000
Depreciable amount = $96,000
Depreciation per year = $9,600 ($96,000/10)
Accumulated Depreciation at Dec. 31, 2021 = $67,200
This shows that the equipment was bought 7 years ago (not clear from the question), because $9,600 x 7 = $67,200
b) Depreciation expense for 2022 = $2,400 ($9,600 x 3/12)
c) Total accumulated depreciation = $69,600 ($67,200 + 2,400)
d) The difference in the Sale of Equipment account is the loss on sale = $13,400 ($104,000 - 69,600 - 21,000). This shows that the equipment was sold at a loss of $13,400.
