Question

Cheyenne Corporation owns equipment that cost $49,200 when purchased on April 1, 2013. Depreciation has been recorded at a rate of $8,200 per year, resulting in a balance in accumulated depreciation of $38,950 at December 31, 2017. The equipment is sold on July 1, 2018, for $9,840. Prepare journal entries to
(a) update depreciation for 2018 and
(b) record the sale

Answer 1

Answer:

Please see the answers below:

Explanation:

(a)

Dated: July 1, 2018

Debit: Depreciation Expense         $4,100

Credit: Accumulated Depreciation           $4,100

To record Depreciation Expense for 6 months as the depreciation expense is $8,200 per year.

(b)

Dated: July 1, 2018

Debit: Cash                                       $9,840

Debit: Accumulated Depreciation   $43050

Credit: Gain on Sale                                         $3690

Credit: Equipment                                         $49,200

To record the sale of asset with Gain.