Brown Company purchased equipment in 2011 for $150,000 and estimated a $10,000 salvage value at the end of the equipment's 10-year useful life. At December 31, 2017, there was $98,000 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2018, the equipment was sold for $40,000.

Question

Business

Aaron Yoder

2 March, 03:21

Brown Company purchased equipment in 2011 for $150,000 and estimated a $10,000 salvage value at the end of the equipment's 10-year useful life. At December 31, 2017, there was $98,000 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2018, the equipment was sold for $40,000.

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Answers (2)

Know the Answer?

Camryn Bender · Answer 1

The journal entry for disposal of equipment will be as follows;

Explanation:

Accumulated Depreciation Dr.$98,000

Cash Dr.$40,000

Loss on disposal (150-98-40) Dr.$12,000

Equipment Cr.$150,000

Dillon Mcintosh · Answer 2

Dr Depreciation Expense 3,500

Cr Accumulated Depreciation-Equipment 3,500

Dr Cash 40,000

Dr Loss on Disposal of Plant Assets 8,500

Dr Accumulated Depreciation-Equipment 101,500

Cr Equipment 150,000

Explanation:

Brown Company Journal entry

(a)

Dr Depreciation Expense 3,500

Cr Accumulated Depreciation-Equipment 3,500

($14,000 * 1/4 = $3,500)

Dr Cash 40,000

Dr Loss on Disposal of Plant Assets 8,500

Dr Accumulated Depreciation-Equipment ($98,000 + $3,500) 101,500

Cr Equipment 150,000