Carey Enterprises sold equipment on January 1, 2014 for $10,000. The equipment had cost $48,000. The balance in Accumulated Depreciation at January 1 is $40,000. Requirements: 1. Compute the gain or loss on sale 2. Prepare journal entries to record the sale of the equipment

Answers

Answer 1

The sale of an equipment is referred to as disposal of an asset. The required answers are:

1. Gain on disposal = $2000

2.    Journal entry for the disposal of the equipment.

                              Dr                       Cr

                              $                         $

Cash acct.            10000        

Asset                                              8000

P or L                                              2000  

Disposal of an asset implies the sale of a plant, property, or equipment. This would ensure the recovery of the carrying amount of the item during sale.

1. The gain or loss on sale of the equipment can be determined by deducting its carrying amount from its recoverable amount.

Thus, to determine the gain or loss on disposal;

                                         $'000

Cost                                     48

Accum. Depreciation          40

Carrying amount                   8

Gain or loss on disposal = Selling price - carrying amount

                                         = $10000 - $8000

                                         = $2000

The gain on disposal is $2000.

2.                           Dr                       Cr

                              $                         $

Cash acct.            10000        

Asset                                              8000

P or L                                              2000                              

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Answer:

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Answer:

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Answers

Answer:

[tex]a=1[/tex]

Step-by-step explanation:

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Hi there!

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Answer:

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