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Sweet Corporation owns machinery that cost $22,000 when purchased on July 1, 2017. Depreciation has been recorded at a rate of $2,640 per year, resulting in a balance in accumulated depreciation of $9,240 at December 31, 2020. The machinery is sold on September 1, 2021, for $11,550. Prepare journal entries to (a) update depreciation for 2021 and (b) record the sale.

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  1. 3 May, 17:29
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    Answer and Explanation:

    The journal entries are shown below:

    a. Depreciation expense $1,60

    To Accumulated depreciation $1,600

    (Being the depreciation expense is recorded)

    Since the machinery is purchase on July 1 and the depreciation is calculated till December so we have to considered 6 months depreciation which is shown below:

    = $2,640 * 6 months : 12 months

    = $1,320

    b. The another entry for selling the machine is

    Cash $11,550

    Accumulated depreciation $10,560 ($9,240 + $1,320)

    To Machinery A/c $22,000

    To Gain on sale of machinery $110

    (being the sale of machinery is recorded)

    The gain on sale of machinery is a balancing figure
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