Question

Carey Enterprises sold equipment on January 1, 2020 for $10,000. The equipment had cost $48,000. The...

Carey Enterprises sold equipment on January 1, 2020 for $10,000. The equipment had cost $48,000. The balance in Accumulated Depreciation at January 1 is $40,000. What entry would Carey make to record the sale of the equipment? (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit
Business   Accounting   
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Homework Answers

Answer #1

Cost of equipment = $48,000

Accumulated depreciation = $40,000

Book value of equipment = Cost of equipment - Accumulated depreciation

= 48,000 - 40,000

= $8,000

Sale price of equipment = $10,000

Gain on sale of equipment = Sale price of equipment - Book value of equipment

= 10,000 - 8,000

= $2,000

Journal

Date

Account Title and Explanation

Debit

Credit
Jan 1, 2020 Cash 10,000
Accumulated depreciation - Equipment 40,000
Gain on sale of equipment 2,000
Equipment 48,000
(To record sale of equipment)

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