Concord Corporation owns equipment that cost $64,200 when purchased on January 1, 2017. It has been depreciated using the straight-line method based on an estimated salvage value of $3,300 and an estimated useful life of 5 years.Prepare Concord Corporation’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 $31,540 on January 1, 2020.(b)Sold for $31,540 on May 1, 2020.(c)Sold for $10,300 on January 1, 2020.(d)Sold for $10,300 on October 1, 2020.

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Asked Nov 4, 2019
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Concord Corporation owns equipment that cost $64,200 when purchased on January 1, 2017. It has been depreciated using the straight-line method based on an estimated salvage value of $3,300 and an estimated useful life of 5 years.

Prepare Concord Corporation’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 $31,540 on January 1, 2020.

(b)

Sold for $31,540 on May 1, 2020.

(c)

Sold for $10,300 on January 1, 2020.

(d)

Sold for $10,300 on October 1, 2020.

 

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Expert Answer

Step 1

Straight line method of calculating depreciation is a strategy for computing deterioration and amortization. It is determined by deducting salvage value of the asset from the cost of the asset and divided by its useful life in years.

Step 2

a. When equipment is sold at $31,540 on Jan 1.

Accumulated depreciation for three years from 1st Jan. 2017 - 1st Jan. 2020

Debit
Date
Accounts title and explanation
Credit
31,540
36,540
1st Jan 2020 Cash
Accumulated depreciation
Equipment
Gain on sale of equipment (Bal. fig.)
(to record the sale of equipment)
64,200
3,880
Cost of the asset-Scrap value
Annual depreciation=-
Useful life of the asset
$64,200- $3,300
x 3
5
= $12,180 x3
= $36,540
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Debit Date Accounts title and explanation Credit 31,540 36,540 1st Jan 2020 Cash Accumulated depreciation Equipment Gain on sale of equipment (Bal. fig.) (to record the sale of equipment) 64,200 3,880 Cost of the asset-Scrap value Annual depreciation=- Useful life of the asset $64,200- $3,300 x 3 5 = $12,180 x3 = $36,540

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Step 3

b . When equipment is sold at $31,540 on May 1.

Working note:

Accumulated depreciation of three years from 1st Jan. 2017 - 1st Jan. 2020 is $36,540 as calculated in part a.

Depreciation from 1st Jan 2020 – 1st May 2020= ($12,180 × 4) ÷ 12

                         &nb...

Date
Accounts title and explanation
Debit
Credit
$
$
1st May 2020 Depreciation expense
4,060
Accumulated depreciation
(to record depreciation)
4,060
1st May 2020 Cash
31,540
40,600
7,940
Accumulated depreciation
loss on sale of equipment
Equipment
(to record the sale of equipment)
64,200
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Date Accounts title and explanation Debit Credit $ $ 1st May 2020 Depreciation expense 4,060 Accumulated depreciation (to record depreciation) 4,060 1st May 2020 Cash 31,540 40,600 7,940 Accumulated depreciation loss on sale of equipment Equipment (to record the sale of equipment) 64,200

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