Question

1 Payne Company purchased equipment in 2010 for $90,000 and estimated a $6,000 residual value at the end of the equipment's 10-year useful life. At December 31, 2016, there was $58,800 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2017, the equipment was sold for $26,000. Please prepare the appropriate journal entries to remove the equipment from the books of Payne Company on March 31, 2017.

Answer 1

Solution 1:

Journal Entries - Payne Company
Date	Particulars	Debit	Credit
31-Mar-17	Depreciation Expense Dr ($8,400*3/12)	$2,100.00
	To Accumulated Depreciation - Equipment		$2,100.00
	(To record depreciation on equipment)
31-Mar-17	Cash Dr	$26,000.00
	Accumulated Depreciation - Equipment Dr	$60,900.00
	Loss on sale of equipment	$3,100.00
	To Equipment		$90,000.00
	(To record sale of equipment)