Equipment purchased for $6,000 on 1/1/19 was taken out of service at the beginning of August 2021 due to recurring maintenance problems. The company’s attempts to find a buyer have been unsuccessful. Depreciation recorded on the equipment prior to 2021 was $2,400. No depreciation has been taken in 2021. If a buyer is not found, and that now appears likely, there will be no proceeds from disposing of the equipment.

Prepare end of year adjusting entries, corrections, and any other necessary entries necessary to prepare accurate financial statements for 2021. Your company uses straight-line depreciation and depreciates assets to the nearest whole month in use during the year. Adjustments are only recorded at the end of the fiscal year unless otherwise noted. Reversing entries are used for deferrals which were originally recorded in income statement accounts and all accruals.

Answer rating: 100% (QA)

For the loss on disposal of the equipment Debit Equipment for 6000 Credit Accumulated Depreciation for 2400 Credit Gain on Disposal of Equipment for 3... View the full answer