No. Account Titles and Explanation Debit Credit (a) (b) (To record depreciation) (To record sale of equipment) (c) (d) (To record depreciation) (To record depreciation) (To record sale of equipment)
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.
Prepare Pryce Company’s journal entries to record the sale of the equipment in these four independent situations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g.125. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
| (a) | Sold for $31,000 on January 1, 2019. | |
| (b) | Sold for $31,000 on May 1, 2019. | |
| (c) | Sold for $11,000 on January 1, 2019. | |
| (d) | Sold for $11,000 on October 1, 2019. |
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