purchased equipment on January 1, 2018 , for $ 27 comma 419. Suppose Duck Pond Golf Club Sold the equipment for $ 19 comma 000 on December 31 comma 2019. Accumulated Depreciation as of December 31, 2019 , was $ 12 comma 186. Journalize the sale of the equipment, assuming straight-line depreciation was used.

Question

Meadow Hanna

Business

20 February, 12:13

purchased equipment on January 1, 2018 , for $ 27 comma 419. Suppose Duck Pond Golf Club Sold the equipment for $ 19 comma 000 on December 31 comma 2019. Accumulated Depreciation as of December 31, 2019 , was $ 12 comma 186. Journalize the sale of the equipment, assuming straight-line depreciation was used.

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Lizeth Carey · Answer 1

31 December 2019

Cash 19000 Dr

Accumulated depreciation 12186 Dr

Equipment 27419 Cr

Gain on disposal 3767 Cr

Explanation:

Straight line depreciation method charges a constant depreciation expense through out the useful life of the asset.

To calculate the gain or loss on disposal/sale of an asset like this, we need to first determine the book value or carrying value of asset on that day.

Carrying value = Cost - Accumulated depreciation

Carrying value = 27419 - 12186

Carrying value = $15233

Gain or (loss) on disposal = Cash/Sale proceeds - Carrying Value

Gain or (loss) on disposal = 19000 - 15233

Gain or (loss) on disposal = $3767 Gain