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Chapter 9: 8SE (page 488)

On October 31, 2018, Alternative Landscapes discarded equipment that had a cost of \(26,920. Accumulated Depreciation as of December 31, 2017, was \)25,000. Assume annual depreciation on the equipment is $1,920. Journalize the partial-year depreciation expense and disposal of the equipment.

Short Answer

Expert verified

The loss on disposal of equipment is $320 and the required journal entries are passed.

Step by step solution

01

Computation of Gain or loss

PartialYearDepreciation=AnnualDepreciation×TimePeriod=$1,920×1012=$1,600

Gainor(loss)=MarketValueofassetreceived-Lessbookvalue-AccumulatedDepreciation=0-($26,920-$26,600)=($320)

02

Journal entry to record partial year depreciation and disposal of the equipment

Journal Entry

Date

Accounts and Explanation

Debit ($)

Credit ($)

Oct 31

Depreciation Expense- Equipment

1,600

Accumulated Depreciation- Equipment

1,600

(To record depreciation on equipment)

Oct 31

Accumulated Depreciation- Equipment

26,600

Loss on disposal of Equipment

320

Equipment

26,920

(Discarded the equipment)

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Most popular questions from this chapter

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