Wilbur Company sells equipment on March 31, 2021, for $35,000 cash. The equipment was purchased on January
Question:
Wilbur Company sells equipment on March 31, 2021, for $35,000 cash. The equipment was purchased on January 5, 2018, at a cost of $86,400, and had an estimated useful life of five years and a residual value of $2,200. Wilbur Company uses straight-line depreciation for equipment. Adjusting journal entries are made annually at the company’s year end, December 31. Prepare the journal entries to
(a) Update depreciation to March 31, 2021,
(b) Record the sale of the equipment,
(c) Record the sale of the equipment if Wilbur Company received $29,000 cash for it.
Step by Step Answer:
a Mar 31 Depreciation Expense 86400 2200 5 312 4210 Accumulated Depreciation x Equipment 4210 To rec...View the full answer
Accounting Principles Volume 1
ISBN: 978-1119502425
8th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
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