Answer:
1. Journalize the partial year depreciation expense:
Debit Depreciation expense $1,250
Credit Accumulated depreciation account $1,250
2. The entry recording disposal of the equipment:
Debit Accumulated depreciation account $26,250
Debit Loss on asset disposal $13,750
Credit Equipment asset $40,000
Explanation:
Annual depreciation on the equipment is $2,500
Depreciation expense for 2015 = $2,500/2 = $1,250
The entry:
Debit Depreciation expense $1,250
Credit Accumulated depreciation account $1,250
On June 30, 2015, Accumulated Depreciation = $25,000 + $1,250 = $26,250
The Book value of the asset = $40,000 - $26,250 = $13,750
The entry recording disposal of the equipment:
Debit Accumulated depreciation account $26,250
Debit Loss on asset disposal $13,750
Credit Equipment asset $40,000
