Selby Company sold equipment that had a book value of $13,500 for $15,000. The equipment originally cost $45,000 and it is estimated that it would cost $57,000 to replace the equipment. Prepare the appropriate journal entry to record the disposition of the equipment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Question

Business

Ireland

28 March, 02:30

Selby Company sold equipment that had a book value of $13,500 for $15,000. The equipment originally cost $45,000 and it is estimated that it would cost $57,000 to replace the equipment. Prepare the appropriate journal entry to record the disposition of the equipment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

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Sylvia Harmon · Answer 1

Answer and Explanation:

The journal entry is shown below:

Cash $15,000

Accumulated depreciation ($45,000 - $13,500) $31,500

To gain on sale of an equipment ($15,000 - $13,500) $1,500

To Equipment $45,000

(Being the disposal of an equipment is recorded)

For recording this we debited the cash and accumulated depreciation as it increased the assets and accumulated depreciation and credited the gain and equipment as it increased the gain and decreased the assets