Monty Manufacturing has old equipment that cost $52,000. The equipment has accumulated depreciation of $28,300. Monty has decided to sell the equipment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

a. What entry would Monty make to record the sale of the equipment for $38,000 cash.
b. What entry would Monty make to record the sale of the equipment for $16,500 cash.

a.

Cash                                                               38000 Dr

Accumulated Depreciation-Equipment       28300 Dr

           Equipment Account                               52000 Cr

           Gain on Disposal                                    14300 Cr

b.

Cash                                                              16500 Dr

Accumulated Depreciation-Equipment    28300 Dr

Loss on Disposal                                          7200 Dr

        Equipment Account                                   52000 Cr

Explanation:

a.

The carrying value of the equipment is its net value in the books after deducting the accumulated depreciation from the cost.

The carrying value of the asset before sale is = 52000 - 28300 = $23700

The gain/loss on disposal = Cash received from sale - carrying value

Gain/loss on disposal = 38000 - 23700 = $14300 or a gain of $14300

b.

The gain/loss on disposal = 16500  -  23700  = -$7200 or a loss of $7200

choices : )

explanation: