see question below

Question

A piece of equipment costing $24,000 with an accumulated depreciation of $13,000 was sold.

Prepare the necessary journal entries for the following independent scenarios:

 a) Sold for $15,000 cash

 b) Sold for $10,000 cash

 c) Sold for $11,000 cash

Answer 1

Prior to the sale, the asset (Equipment) has a debit (DR) balance of $24,000. When you sell the Equipment you need to zero out (or clear) the balance of the Equipment account. To do this, you'll credit (CR) Equipment $24,000.

Prior to the sale, Accumulated Depreciation has a credit (CR) balance of $13,000. When you sell the Equipment you need to zero out (or clear) the balance of the Accumulated Depreciation account. To do this, you'll debit (DR) Accumulated Depreciation $13,000.

When you receive Cash, you debit (DR) cash.

Add the Cash received plus the Accumulated Depreciation. If the amount is less than the balance of the Equipment ($24,000), you will debit (DR) Loss on sale of equipment for the difference. If the amount is greater than the balance of the Equipment ($24,000), you will credit (CR) Gain on sale of equipment for the difference. If Cash received plus Accumulated Depreciation = the balance of the Equipment ($24,000), there is no gain or loss.

Hope this helps!

Scott

A:

Cash (DR) 15,000

Accum. Dep (DR) 13,000

Equipment (CR) 24,000

Gain on Sale of Equipment (CR) 4,000

B:

Cash (DR) 10,000

Accum. Dep (DR) 13,000

Loss on Sale of Equipment (DR) 1,000

Equipment (CR) 24,000

C:

Cash (DR) 11,000

Accum. Dep (DR) 13,000

Equipment (CR) 24,000