Ivanhoe Company sells office equipment on July 31, 2017, for $22,410 cash. The office equipment originally cost $81,920 and as of January 1, 2017, had accumulated depreciation of $37,600. Depreciation for the first 7 months of 2017 is $4,580. Prepare the journal entries to (a) update depreciation to July 31, 2014, and (b) record the sale of the equipment.

Question

Joseph Armstrong

Business

30 September, 06:21

Ivanhoe Company sells office equipment on July 31, 2017, for $22,410 cash. The office equipment originally cost $81,920 and as of January 1, 2017, had accumulated depreciation of $37,600. Depreciation for the first 7 months of 2017 is $4,580. Prepare the journal entries to (a) update depreciation to July 31, 2014, and (b) record the sale of the equipment.

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Answers (1)

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Nehemiah Johnson · Answer 1

The journal entries are shown below:

Explanation:

The journal entries are shown below:

a. Depreciation Expense A/c Dr $4,580

To Accumulated Depreciation - Office equipment A/c $4,580

(Being depreciation expense is recorded)

b. Cash A/c Dr $22,410

Accumulated Depreciation - Office equipment A/c $42,180 ($37,600 + $4,580)

Loss on Disposal of Office equipment A/c $17,330

To Office equipment A/c $81,920

(Being sale of machinery is recorded and the remaining balance is debited to the loss on Disposal of office equipment A/c)