On January 1, Year 1, Twisted Pretzel, Inc., purchased equipment for $32,000 with an estimated useful life of 8 years and $0 salvage value. On January 1, Year 5, Twisted Pretzel, sold the equipment for $14,000 cash. The journal entry to record the sale of this equipment includes ______. (Select all that apply.) credit to Accumulated Depreciation for $16,000 debit to Cash for $14,000 debit to Gain (Loss) on Sale of Equipment for $2,000 debit to Equipment for $32,000 credit to Gain (Loss) on Sale of Equipment for $2,000 credit to Equipment for $32,000 debit to Accumulated Depreciation for $16,000
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.
On January 1, Year 1, Twisted Pretzel, Inc., purchased equipment for $32,000 with an estimated useful life of 8 years and $0 salvage value. On January 1, Year 5, Twisted Pretzel, sold the equipment for $14,000 cash. The
credit to
debit to Cash for $14,000
debit to Gain (Loss) on Sale of Equipment for $2,000
debit to Equipment for $32,000
credit to Gain (Loss) on Sale of Equipment for $2,000
credit to Equipment for $32,000
debit to Accumulated Depreciation for $16,000
credit to Cash for $14,000
credit to Equipment for $16,000
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
