Computer equipment (office equipment) purchased 6 1/2 years ago for $170,000, with an estimated life of 8 years and a residual value of $10,000, is now sold for $60,000 cash. (Appropriate entries for depreciation had been made for the first six years of use.) Required: Journalize the following entries: a. Record the depreciation for the one-half year prior to the sale, using the straight-line method.* b. Record the sale of the equipment.* c. Assuming that the equipment had been sold for $25,000 cash, prepare the entry to record the sale.* *Refer to the Chart of Accounts for exact wording of account titles. CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Inventory 117 Supplies 119 Prepaid Insurance 120 Land 121 Office Equipment 122 Accumulated Depreciation-Office Equipment 132 Goodwill 133 Patents LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends REVENUE 410 Sales 610 Interest Revenue 620 Gain on Sale of Equipment EXPENSES 510 Cost of Goods Sold 520 Salaries Expense 521 Advertising Expense 522 Supplies Expense 523 Delivery Expense 524 Rent Expense 525 Insurance Expense 531 Repairs and Maintenance Expense 541 Depreciation Expense-Office Equipment 543 Depletion Expense 544 Amortization Expense-Patents 591 Miscellaneous Expense 710 Interest Expense 720 Loss on Sale of Equipment

Name: Computer equipment (office equipment) purchased 6 1/2 years ago for $1
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Description: Computer equipment (office equipment) purchased 6 1/2 years ago for $170,000, with an estimated life of 8 years and a residual value of $10,000, is now sold for $60,000 cash. (Appropriate entries for depreciation had been made for the first six years

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Computer equipment (office equipment) purchased 6 1/2 years ago for $170,000, with an estimated life of 8 years and a residual value of $10,000, is now sold for $60,000 cash. (Appropriate entries for depreciation had been made for the first six years of use.)

Required:

	Journalize the following entries:
a.	Record the depreciation for the one-half year prior to the sale, using the straight-line method.*
b.	Record the sale of the equipment.*
c.	Assuming that the equipment had been sold for $25,000 cash, prepare the entry to record the sale.*
	*Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS

General Ledger

	ASSETS
110	Cash
111	Petty Cash
112	Accounts Receivable
114	Interest Receivable
115	Notes Receivable
116	Inventory
117	Supplies
119	Prepaid Insurance
120	Land
121	Office Equipment
122	Accumulated Depreciation-Office Equipment
132	Goodwill
133	Patents

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends

	REVENUE
410	Sales
610	Interest Revenue
620	Gain on Sale of Equipment

	EXPENSES
510	Cost of Goods Sold
520	Salaries Expense
521	Advertising Expense
522	Supplies Expense
523	Delivery Expense
524	Rent Expense
525	Insurance Expense
531	Repairs and Maintenance Expense
541	Depreciation Expense-Office Equipment
543	Depletion Expense
544	Amortization Expense-Patents
591	Miscellaneous Expense
710	Interest Expense
720	Loss on Sale of Equipment

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