Question

Richland Company has a calendar year reporting period. On July 1, 2020, Richland’s equipment, with an original cost of $29,000, was sold to Quaker Corporation for $15,000. The January 1, 2020, balance in the Accumulated Depreciation account was $10,000. Depreciation for the first six months of 2020 was $2,000. The journal entry to record the transaction would include a

Answer 1

Answer and Explanation:

The journal entry would be

Cash Dr $15,000

Accumulated depreciation ($10,000 + $2,000) $12,000

Loss on disposal - Plant assets $2,000

To equipment $29,000

(Being the sale of the equipment is recorded)

here the cash, accumulated depreciation and loss would be debited as it increased the assets and losses while on the other hand the equipment is credited as it decreased the assets