Sale of equipment



Q23. Sale of equipment
Entity A sold the following equipment.
(a) Cost of equipment = $70,000
(b) Accumulated depreciation = $63,000
(c) Sale price of equipment = $8,500
Prepare a journal entry to record this transaction.

A23. Decrease in accumulated depreciation is recorded on the debit side. Decrease in equipment is recorded on the credit side.

  Debit Credit
Cash 8,500  
Accumulated depreciation 63,000  
     Equipmen   70,000
     Gain on sale of equipment   1,500

[Note]
1. Book value of equipment = Cost of equipment – Accumulated depreciation
= $70,000 – $63,000 = $7,000
2. Gain on sale of equipment = Sale price – Book value of equipment
= $8,500 – $7,000 = $1,500

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