Question

During 2019, equipment with a book value of $49,000 and an original cost of $255,000 was sold at a loss of $4,800. 1. How much cash did Anders receive from the sale of equipment? 2. How much depreciation expense was recorded on equipment during 2019? 3. What was the cost of new equipment purchased by Anders during 2019?

Answer 1

Answer:

1) 44200

2) & 3) Balancing figure of provision for depreciation account, equipment account give depreciation on equipment sold, new equipment purchased.

Explanation:

1) Cash received for sale of equipment = Current Book Value - Loss at sale

49000 - 4800 = 44200

2) 'Depreciation on equipment for current year' can be solved by making - equipment ac & provision for depreciation account.

• Equipment opening balance at dr side, closing balance at cr side ; & provision opening balance cr side, closing balance dr side.
• Provision for depreciation ac dr balancing figure, is the depreciation on sold asset upto 2015, transferred to asset account cr side.

3) Depreciation (transferred), Loss on sale, & sale amount credited to equipment ac. Balancing figure on dr side of equipment ac shows new equipment purchased during the year.