Answer:
Record the sale
Dr Cash $16,000 Debit
Dr Accumulated Depr $18,000 Debit
Cr Equipment $32,000 Credit
Cr Gain $2,000 Credit
DEBIT (Cash + Acc Dep) $34.000 Debit
CREDIT (Equip.+Gain) $34.000 Credit
Explanation:
Equipment $32.000 Debit
Equipment Value for Depreciation $30.000 Because $2,000 is the residual value that does not compute for depreciation
Accumulated Depr $18.000 Credit
The accumulated Depreciation is calculated by dividing the equipment value of $30,000 by 5 years of service life.
As the equipment only was used 3 years, the accumulated depreciation only reflect $6,000*3 = $18,000
Record the sale
Dr Cash $16.000 Debit
Dr Accumulated Depr $18.000 Debit
Cr Equipment $32.000 Credit
Cr Gain $2.000 Credit
DEBIT (Cash + Acc Dep) $34.000 Debit
CREDIT (Equip.+Gain) $34.000 Credit
As the residual value of the equipment it's $14,000 ( $32,000 - $18,000) and the sale was by $16,000, it means a gain of $2,000
