Question

Antone Company sells office equipment on July 31, 2017, for $21,000 cash. The office equipment originally cost $72,000 and as of January 1, 2017, had accumulated depreciation of $42,000. Depreciation for the first 7 months of 2017 is $4,600. Prepare a tabular summary to (a) update depreciation to July 31, 2017, and (b) record the sale of the equipment.

Answer 1

Answer:

(a) update depreciation to July 31, 2017

Depreciation - Profit and Loss $4,600 (debit)

Accumulated Depreciation - Statement of Financial Position $4,600 (credit)

(b) record the sale of the equipment

Cash $21,000 (debit)

Accumulated Depreciation $ 46,600 (debit)

Loss on Sale of Equipment $4,400 (debit)

Office Equipment $72,000 (credit)

Explanation:

(a) update depreciation to July 31, 2017

Recognise an Expense - Depreciation in Income Statement

(b) record the sale of the equipment

De-recognise the Office Equipment at Cost

De-recognise the Total Accumulated depreciation of equipment to date

Recognise the Cash asset received at Sale of Office Equipment

Recognise the Loss arising from Sale of Equipment in Income Statement