Napoli Manufacturing has old equipment that cost $52,000. The equipment has accumulated depreciation of $28,000. Napoli has decided to sell the equipment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) What entry would Napoli make to record the sale of the equipment for $26,000 cash? (b) What entry would Napoli make to record the sale of the equipment for $15,000 cash?

Question

Mohammad

Business

24 December, 21:15

Napoli Manufacturing has old equipment that cost $52,000. The equipment has accumulated depreciation of $28,000. Napoli has decided to sell the equipment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) What entry would Napoli make to record the sale of the equipment for $26,000 cash? (b) What entry would Napoli make to record the sale of the equipment for $15,000 cash?

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Answers (1)

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Azul · Answer 1

Dr cash $26,000

Dr accumulated depreciation $28,000

Cr equipment $52,000

Cr gain on disposal ($26,000+$28,000-$52,000) $2,000

b.

Dr cash $15,000

Dr accumulated depreciation $28,000

Dr loss on disposal ($15,000+$28,000-$52,000) $9000

Cr equipment $52,000

Explanation:

The sale of the equipment for $26,000 means that cash would be debited with $26,000 with accumulated depreciation being written off by debiting accumulated depreciation with $28,000 while the asset account is credited with $52,000 with a difference of $2000 gain credited to gain on disposal of equipment.

The sale of the equipment for $15,000 means that cash would be debited with $26,000 with accumulated depreciation being written off by debiting accumulated depreciation with $28,000 while the asset account is credited with $52,000 with a difference of $9000 loss debited to loss on disposal of equipment