Cullumber Company owns equipment that cost $61,500 when purchased on January 1, 2019. It has been depreciated using the straight-line method based on estimated salvage value of $4,800 and an estimated useful life of 5 years. Prepare Cullumber Company’s journal entries to record the sale of the equipment in these four independent situations. (a) Sold for $29,020 on January 1, 2022. (b) Sold for $29,020 on May 1, 2022. (c) Sold for $10,300 on January 1, 2022. (d) Sold for $10,300 on October 1, 2022.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Cullumber Company owns equipment that cost $61,500 when purchased on January 1, 2019. It has been
Prepare Cullumber Company’s
| (a) | Sold for $29,020 on January 1, 2022. | |
| (b) | Sold for $29,020 on May 1, 2022. | |
| (c) | Sold for $10,300 on January 1, 2022. | |
| (d) | Sold for $10,300 on October 1, 2022. |
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