Question

Sheridan Company sells office equipment on July 31, 2017, for $20,320 cash. The office equipment originally cost $84,510 and as of January 1, 2017, had accumulated depreciation of $41,710. Depreciation for the first 7 months of 2017 is $3,670.
Prepare the journal entries to (a) update depreciation to July 31, 2017, and (b) record the sale of the equipment.

Answer 1

Answer:

A.

Jul 31

Dr Depreciation expense 3,670

Cr Accumulated depreciation 3,670

b.

Jul-31

Dr Cash 22,320

Dr Accumulated depreciation 43,380

Dr Loss on disposal of Equipment 18,810

Cr Equipment 84,510

Explanation:

Sheridan Company Journal entries

a.

Jul-31

Dr Depreciation expense 3,670

Cr Accumulated depreciation 3,670

(To record depreciation for 7 months)

b.

Jul-31

Dr Cash 22,320

Dr Accumulated depreciation 43,380

Dr Loss on disposal of Equipment 18,810

Cr Equipment 84,510

(To record disposal of equipment)

Loss on disposal of Equipment

$84,510-$20,320=$64,190

$64,190-$41,710=$22,480

$22,480-$3,670=$18,810