Headland Corporation owns machinery that cost $20,000 when purchased on July 1, 2007. Depreciation has been recorded at a rate of $2,400 per year, resulting in a balance in accumulated depreciation of $8,400 at December 31, 2010. The machinery is sold on September 1, 2011, for $10,500. Prepare journal entries to:A) Update depreciation for 2011B) Record the sale

Question

Elena Sherman

Business

31 May, 18:04

Headland Corporation owns machinery that cost $20,000 when purchased on July 1, 2007. Depreciation has been recorded at a rate of $2,400 per year, resulting in a balance in accumulated depreciation of $8,400 at December 31, 2010. The machinery is sold on September 1, 2011, for $10,500. Prepare journal entries to:A) Update depreciation for 2011B) Record the sale

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Irene Anthony · Answer 1

Journal Entries to:

A) Update depreciation for 2011

Dr. Cr.

Depreciation Expenses $1,600

Accumulated Depreciation $1,600

B) Record the sale

Dr. Cr.

Cash $10,500

Accumulated Depreciation $10,000

Profit on Sale $500

machinery Account $20,000

Explanation:

A) Depreciation for the year 2011 = $2,400 x (8/12) = $1,600

B) Accumulated Depreciation = ($2,400 x 3.5) + 1600 = $10,000