Question

1. Solid Inc decided to sell the equipment (from the question above) on September 30th of 2020 for $195,000. Provide all necessary journal entries for September 30th, 2020.

2.

On February 1st of 2019, Solid Inc. exchanged a $245,000 two year note payable (the note comes with a 10% interest rate, interest due on January 31st of each year) for a piece of equipment. The equipment has a 10 year useful life, a $25,000 residual value, and will be depreciated on a straight-line basis.

Provide all journal entries necessary related to this transaction for the following dates. Solid Inc. has a Dec 31st fiscal year end and provides annual financial statements.

February 1st, 2019

December 31st, 2019

January 31st, 2020

Answer 1

1 Feb 2019 Equipment a\c Dr $ 245000

To 2 year note payable $ 245000

( Being purchase equipment in exchange of 2 year 10%note payable)

31 Dec 2019 Deprication a\c Dr $ 20167

To Profit and loss $ 20167

( Being deprication recorded for period 1 feb to 31 dec 2019)

calculation of deprication = 245000-25000/10year*11/12=20167

31 jan 2020 Deprication a\c Dr $ 1833

To profit and loss $ 1833

( Being deprication recorded for period 1 jan to 31 jan 2020)

calculation of deprication = 245000-25000/10year*1/12= 1833

30 Sep 2020 Bank a\c Dr $ 195000

Loss on sale of Equipment Dr $ 13333

To Equipment $ 208333

( Being Equipment sold)

30 Sep 2020 Deprication a\c Dr $ 14667

To Profit and loss $ 14667

(Being Deprication recorded for period 1 feb to 30 sep 2020)