Garcia co. owns equipment that cost $77,200, with accumulated depreciation of $41,000. record the sale of the equipment under the following three separate cases assuming garcia sells the equipment for (1) $47,300 cash, (2) $36,200 cash, and (3) $31,100 cash.

(1)

cash       47,300 debit

acc dep  41,000 debit

     equipment            77,200 credit

     gain at disposal     11, 100 credit

(2)

cash       36,200 debit

acc dep  41,000 debit

     equipment            77,200 credit

(3)

cash                   31,100 debit

loss at disposal   5,100 debit

acc dep             41,000 debit

     equipment            77,200 credit

Explanation:

book value: historic cost - accumulated depreciation

77,200 - 41,000 = 36,200

Now we compare the book value with the different sales values:

(1) 47,300 - 36,200 = 11,100 gain

(2) 36,200 - 36,200 = zero

(3) 31,100 - 36,200 = 5,100 loss

for the journal entry, in all cases we debit the cash collected

the depreciation and credit the asset.

the nwe will postthe gain or loss an disposal accordingly

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