A microcomputer was purchased on January 1, 2017 at a cost of $11,000. It is expected to have a useful life of 5 years and a residual value of $1000. The microcomputer is depreciated using the straight line method. Assume the microcomputer is disposed of, after year end depreciation has been recorded on January 1, 2020.
REQUIRED: Give the general journal entry to record the sale of the microcomputer under the following unrelated circumstances:
a. The microcomputer is sold for $1,000.
b. The microcomputer is sold for $7,300.
c. The microcomputer is abandoned Calculate Accumulated Depreciation balance at January 1, 2020
Depreciation expense = (Cost - Salvage value)/Useful life
= (11,000-1,000)/5 = 2,000
Accumulated Depreciation = 2,000 * 3 years = 6,000
| A | Cash | 1,000 | |
| Accumulated Depreciation - microcomputer | 6,000 | ||
| Loss on sale | 4,000 | ||
| Equipment - microcomputer | 11,000 | ||
| B | Cash | 7,300 | |
| Accumulated Depreciation - Microcomputer | 6,000 | ||
| Gain on sale of equipment | 2,300 | ||
| Equipment - microcomputer | 11,000 | ||
| C | Accumulated Depreciation - Microcomputer | 6,000 | |
| Loss on disposal | 5,000 | ||
| Equipment - microcomputer | 11,000 | ||
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