QuestionSheridan Compahy has delivery equipment that cost and has been depreciated .
Prepare a tabular summary to record the disposal under the following assumptions.
(a)
Your Answer
Correct Answer (Used)
It was scrapped as having no value.
- Decreases In assets, Mabinties, or stockholders' equity require a negative sign or parentheses.
- Increases in expenses and losses require a negative sign or parentheses
- Increases in Accumulated Depreciation require a negutive sian or parentheses
- Decreases in Accumulated Depreciation are entered as postlve amounts.
(b)
Your Answer
Correct Answer
Your answer is correct.
It was sold for
Decreases in assets, llabilities, or stoch olders' equity require a negative sign or parentheses.
- Increases in expenses and losses require a negative sten or parentheses
- Increases in Accumulated Depreciation require a negative sian or parentheses.
Decreases in Acoumakited Depreciation are entered as postive amounts
Attempts: 3 of 3 used
(c)
It was sold for
- Decreases in assets, liablities, or stockholder' equity require a negotive sign or parentheses,
- Increases in expenses and lasses require a negative sign or porentheses.
- Increases in Accumulated Depreciation require a negative sizn or parentheses.
-Decreases in Accurnulated Depreciation are entered as postive amounts.
Studdy Solution
STEP 1
1. The cost of the delivery equipment is \$54,100.
2. The accumulated depreciation of the equipment is \$24,900.
3. The equipment is being disposed of under different scenarios: scrapped with no value, sold for \$36,800, and sold for \$18,100.
4. Accounting rules for recording changes in assets, liabilities, equity, expenses, and accumulated depreciation are provided.
STEP 2
1. Prepare a tabular summary for scenario (a): Scrapped with no value.
2. Prepare a tabular summary for scenario (b): Sold for \$36,800.
3. Prepare a tabular summary for scenario (c): Sold for \$18,100.
STEP 3
For scenario (a), calculate the loss on disposal:
- Book value of the equipment = Cost - Accumulated Depreciation = \$54,100 - \$24,900 = \$29,200
- Since the equipment is scrapped with no value, the loss is equal to the book value: \$29,200.
Record the disposal in the tabular summary:
- Decrease in Equipment (Asset):
- Decrease in Accumulated Depreciation (Asset):
- Increase in Loss on Disposal (Expense):
STEP 4
For scenario (b), calculate the gain or loss on disposal:
- Book value of the equipment = \$29,200
- Sale price = \$36,800
- Gain on disposal = Sale price - Book value = \$36,800 - \$29,200 = \$7,600
Record the disposal in the tabular summary:
- Decrease in Equipment (Asset):
- Decrease in Accumulated Depreciation (Asset):
- Increase in Cash (Asset):
- Increase in Gain on Disposal (Revenue):
STEP 5
For scenario (c), calculate the gain or loss on disposal:
- Book value of the equipment = \$29,200
- Sale price = \$18,100
- Loss on disposal = Book value - Sale price = \$29,200 - \$18,100 = \$11,100
Record the disposal in the tabular summary:
- Decrease in Equipment (Asset):
- Decrease in Accumulated Depreciation (Asset):
- Increase in Cash (Asset):
- Increase in Loss on Disposal (Expense):
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