Question

garcia company owns equipment that cost $78,000, with accumulated depreciation of $41,400. record the sale of the equipment under the following three separate cases assuming garcia sells the equipment for (1) $47,900 cash, (2) $36,600 cash, and (3) $31,500 cash. view transaction list journal entry worksheet < a b c record the sale of equipment assuming garcia sells the equipment for $47,900 cash. note: enter debits before credits. transaction general journal debit credit 1

Explanation:

Step1: Calculate book - value of equipment

The book - value of the equipment is calculated as the cost minus the accumulated depreciation. Let $Cost = 78000$ and $Accumulated\ Depreciation=41400$. Then, $Book - value=Cost - Accumulated\ Depreciation=78000 - 41400=36600$.

Step2: Case (1): Sale for $47900$

When the equipment is sold for $47900$ cash, there is a gain on the sale. The gain is $Gain = 47900−36600 = 11300$. The journal entry is:

Transaction	General Journal	Debit	Credit
	Accumulated Depreciation	41400
	Equipment		78000
	Gain on Sale of Equipment		11300

Step3: Case (2): Sale for $36600$

When the equipment is sold for $36600$ cash, there is no gain or loss. The journal entry is:

Transaction	General Journal	Debit	Credit
	Accumulated Depreciation	41400
	Equipment		78000

Step4: Case (3): Sale for $31500$

When the equipment is sold for $31500$ cash, there is a loss on the sale. The loss is $Loss=36600 - 31500=5100$. The journal entry is:

Transaction	General Journal	Debit	Credit
	Accumulated Depreciation	41400
	Loss on Sale of Equipment	5100
	Equipment		78000

Answer:

Case (1):

Transaction	General Journal	Debit	Credit
	Accumulated Depreciation	41400
	Equipment		78000
	Gain on Sale of Equipment		11300

Case (2):

Transaction	General Journal	Debit	Credit
	Accumulated Depreciation	41400
	Equipment		78000

Case (3):

Transaction	General Journal	Debit	Credit
	Accumulated Depreciation	41400
	Loss on Sale of Equipment	5100
	Equipment		78000