Cheyenne Corp. owns equipment that cost $63,100 when purchased on January 1, 2017. It has been depreciated using the straight-line method based on an estimated salvage value of $4,900 and an estimated useful life of 5 years. Prepare Cheyenne Corp.’s journal entries to record the sale of the equipment in these four independent situations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g.125. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) Sold for $29,920 on January 1, 2020. (b) Sold for $29,920 on May 1, 2020. (c) Sold for $10,100 on January 1, 2020. (d) Sold for $10,100 on October 1, 2020.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Cheyenne Corp. owns equipment that cost $63,100 when purchased on January 1, 2017. It has been depreciated using the straight-line method based on an estimated salvage value of $4,900 and an estimated useful life of 5 years.
Prepare Cheyenne Corp.’s
|
(a) |
Sold for $29,920 on January 1, 2020. | |
|---|---|---|
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(b) |
Sold for $29,920 on May 1, 2020. | |
|
(c) |
Sold for $10,100 on January 1, 2020. | |
|
(d) |
Sold for $10,100 on October 1, 2020. |
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No. |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
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(a) |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
|
(b) |
enter an account title to record depreciation |
enter a debit amount |
enter a credit amount |
|
enter an account title to record depreciation |
enter a debit amount |
enter a credit amount |
|
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(To record depreciation) |
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enter an account title to record sale of equipment |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record sale of equipment |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record sale of equipment |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record sale of equipment |
enter a debit amount |
enter a credit amount |
|
|
(To record sale of equipment) |
|||
|
(c) |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
|
(d) |
enter an account title to record depreciation |
enter a debit amount |
enter a credit amount |
|
enter an account title to record depreciation |
enter a debit amount |
enter a credit amount |
|
|
(To record depreciation) |
|||
|
enter an account title to record sale of equipment |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record sale of equipment |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record sale of equipment |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record sale of equipment |
enter a debit amount |
enter a credit amount |
|
|
(To record sale of equipment) |
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