Pryce Company owns equipment that cost $65,000 when purchased on January 1, 2011. It has been depreciated

Question:

Pryce Company owns equipment that cost $65,000 when purchased on January 1, 2011. It has been depreciated using the straight-line method based on estimated salvage value of $5,000 and an estimated useful life of 5 years.

Instructions

Prepare Pryce Company’s journal entries to record the sale of the equipment in these four independent situations.

(a) Sold for $31,000 on January 1, 2014.

(b) Sold for $31,000 on May 1, 2014.

(d) Sold for $11,000 on October 1, 2014.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...