Great Value Company purchased equipment on January 1, 2020, for $75,000, with an estimated useful life of 7 years and an estimated residual value of $5,000. The company uses the straight-line method of depreciation. On July 1, 2022, the equipment was sold for $32,500 cash. Accumulated depreciation of $25,000 had been recorded up to the day of the sale Prepare the journal entry for the sale of the equipment on July 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.
Great Value Company purchased equipment on January 1, 2020, for $75,000, with an estimated useful life of 7 years and an estimated residual value of $5,000. The company uses the straight-line method of
Prepare the
| Account Names | DR | CR | |
| Blank 1. Fill in the blank, read surrounding text. | Blank 2. Fill in the blank, read surrounding text. | Blank 3. Fill in the blank, read surrounding text. | Blank 4. Fill in the blank, read surrounding text. |
| Blank 5. Fill in the blank, read surrounding text. | Blank 6. Fill in the blank, read surrounding text. | Blank 7. Fill in the blank, read surrounding text. | Blank 8. Fill in the blank, read surrounding text. |
| Blank 9. Fill in the blank, read surrounding text. | Blank 10. Fill in the blank, read surrounding text. | Blank 11. Fill in the blank, read surrounding text. | Blank 12. Fill in the blank, read surrounding text. |
| Blank 13. Fill in the blank, read surrounding text. | Blank 14. Fill in the blank, read surrounding text. | Blank 15. Fill in the blank, read surrounding text. | Blank 16. Fill in the blank, read surrounding text. |
| Blank 17. Fill in the blank, read surrounding text. | Blank 18. Fill in the blank, read surrounding text. | Blank 19. Fill in the blank, read surrounding text. | Blank 20. Fill in the blank, read surrounding text. |
| Blank 21. Fill in the blank, read surrounding text. | Blank 22. Fill in the blank, read surrounding text. | Blank 23. Fill in the blank, read surrounding text. | Blank 24. Fill in the blank, read surrounding text. |
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
