Based on the attached information, could someone help me solve the AJE adjustments 1 (only)?

1 2 Num 2014 Adj 1 A $569,888 of new equipment was purchased and placed in service on 6/18/2014. An old medical equipment was sold to an unrelated party for $75,000 cash. The original cost of the equipment was $300,000 and it was fully depreciated (no Sec. 179). The cash was deposited in one of the shareholders personal accounts. a Provide a journal entry to calculate the gain on sale and adjust the fixed asset and accumulated depreciation accounts. Memo Account to sell obsolete equipment 17000 Accumulated Depreciation to sell obsolete equipment 16100 Medical Equipment to sell obsolete equipment 18100 Loan to Shareholder to sell obsolete equipment 75000 Gain on Sale of Assets Debit 0.00 b 3 What is the nature of this gain? Could this sale have been conducted in a different way to avoid taxable income? How? Credit 0.00 12:41 PM 10/26/15 Accrual Basis Phoenix Medical Unadjusted Balance Debit Tax Adjustments Adjusted Trial Balance Book Adjustments Credit Debit Adjusted Book Balance Credit through 2014 Credit DecemberDebit Adjusted Tax Balance Credit Debit 10001 Checking 609,842.00 609,842.00 609,842.00 10010 Savings 557,392.23 557,392.23 557,392.23 10020 Cash Maximizer 558,380.05 558,380.05 558,380.05 11000 Accounts Receivable 260,990.00 260,990.00 260,990.00 569,888.00 569,888.00 18100 Loan to Shareholder Adj 1 ### 15000 Furniture and Equipment 40,316.00 40,316.00 40,316.00 15500 Leasehold Improvements 506,889.00 506,889.00 506,889.00 16100 Medical Equipment 1,699,776.00 17000 Accumulated Depreciation 18001 Investment in Big Labs 18050 Investment in R&D Company 1,240,071.00 194,888.00 1,324,776.00 28,953.00 39,065.51 0.00 r 28,953.00 1,207,401.72 30100 Capital Stock 1,000.00 866,507.20 93,648.00 93,648.00 39,065.51 39,065.51 28,953.00 28,953.00 1,207,401.72 1,207,401.72 1,000.00 400,000.00 400,000.00 3,103,563.25 3,103,563.25 43700 Fee for Service Income 5,050,583.00 5,050,583.00 60000 Advertising and Promotion 17,633.00 3,103,563.25 a 75,000.00 17,633.00 5,125,583.00 17,633.00 1,252.00 1,252.00 1,252.00 11,961.00 11,961.00 11,961.00 60400 Bank Service Charges 8,808.00 8,808.00 8,808.00 61000 Business Licenses and Permits 5,611.00 5,611.00 61100 Charitable Contributions (Cash) 60,000.00 60,000.00 61700 Computer and Internet Expenses 13,575.00 60200 Automobile Expense 62400 Depreciation Expense 62500 Dues and Subscriptions Adj 2 86,769.00 5,611.00 b 40,000.00 100,000.00 13,575.00 13,575.00 86,769.00 86,769.00 8,327.00 8,327.00 8,327.00 201,106.00 201,106.00 201,106.00 62600 Equipment Rental:62610 Laser Facility Rent 14,979.00 14,979.00 14,979.00 63300 Insurance Expense 55,356.00 55,356.00 55,356.00 63400 Interest Expense 63,678.00 63,678.00 63,678.00 121,653.00 121,653.00 121,653.00 62600 Equipment Rental 63600 Laboratory Testing Fees 64300 Meals and Entertainment 16,725.00 16,725.00 64400 Medical Records and Supplies 103,456.00 103,456.00 103,456.00 66700 Professional Fees 123,945.00 123,945.00 123,945.00 18,855.00 18,855.00 18,855.00 67800 Salaries and Wages 321,580.00 321,580.00 321,580.00 67800 Salaries and Wages:67810 Officer Compensation 940,000.00 940,000.00 940,000.00 68000 Taxes:68010 Payroll Taxes 206,103.00 206,103.00 68000 Taxes:68020 State Tax 35,041.00 35,041.00 68500 Uniforms 16,121.00 16,121.00 68600 Utilities 30,364.00 30,364.00 67200 Repairs and Maintenance 70200 Interest Income 70222 Tax Exempt Interest 70300 Sublease Rents 71000 Dividends Adj 1 Sale of fixed assets Adj 2 2014 Depreciation Reclass of accounts payable 206,103.00 d 4,389.00 30,652.00 16,121.00 30,364.00 17,621.00 240,000.00 240,000.00 240,000.00 80,000.00 80,000.00 80,000.00 86,769.00 11,102,739.48 ### 685,610.00 833.00 e 12,523.00 5,098.00 86,769.00 0.00 0.00 11,384,396.48 11,384,396.48 Book Income 2,992,908 Book Income Check Figure Book Adjustments 14,638.00 17,621.00 Adj 1 11,102,739.48 2,087.00 833.00 M-1 Accrual to Cash - Accounts Payable TOTAL c 833.00 75000 Gain on Sale of Assets 107245 1,000.00 400,000.00 32000 Retained Earnings 47300 Refunds 1,434,959.00 3,206,518.00 866,507.20 r Credit 1,324,776.00 1,434,959.00 3,206,518.00 122,601.00 28001 Business Loan 31400 Shareholder Distributions 375,000.00 866,507.20 20100 Credit Cards 20200 Accrued Salaries Adj 1 Adj 1 & 2 3,206,518.00 20001 Accounts Payable r DebitJanuary 86,769.00 f 28,953.00 81,476.00 28,953.00 81,476.00 11,446,873.48 Tax Income 11,446,873.48 2,992,908 553,702 75000 86769 37500 Tax Adjustments a Accrual to Cash Adjustment - Accounts Receivable b Charitable contributions carryover c 50% Meals and Entertainment d Non-deductible penalties e Tax Exempt interest f Accrual to Cash Adjustment - Accounts Payable 75000 40000 2087 4389 12523 28953 Page 1 of 4 Phoenix Medical 2:20 PM 10/26/15 Accrual Basis Date 12/31/2014 12/31/2014 Adjusting Journal Entries January through December 2014 Num 2014 Adj 1 2014 Adj 2 Memo Account to sell obsolete equipment 17000 Accumulated Depreciation to sell obsolete equipment 16100 Medical Equipment to sell obsolete equipment 18100 Loan to Shareholder to sell obsolete equipment 75000 Gain on Sale of Assets Debit Credit 0.00 0.00 0.00 0.00 0.00 0.00 to record 2014 depreciation on assets placed in ser62400 Depreciation Expense to record 2014 depreciation on assets placed in ser17000 Accumulated Depreciation to record Sec. 179 expense 62400 Depreciation Expense to record Sec. 179 expense 17000 Accumulated Depreciation to record depreciation on assets placed in service 62400 Depreciation Expense to record depreciation on assets placed in service 17000 Accumulated Depreciation TOTAL Page 2 of 4 Phoenix Medical 12:53 PM 10/26/15 Accrual Basis Balance Sheet As of December 31, 2014 Dec 31, 14 Dec 31, 13 $ Change ASSETS Current Assets Checking/Savings 10001 Checking 609,842.00 277,131.00 332,711.00 10010 Savings 557,392.23 325,541.23 231,851.00 10020 Cash Maximizer 558,380.05 69,672.05 488,708.00 1,725,614.28 672,344.28 1,053,270.00 260,990.00 826,113.00 -565,123.00 260,990.00 826,113.00 -565,123.00 75,000.00 0.00 75,000.00 75,000.00 0.00 75,000.00 2,061,604.28 1,498,457.28 563,147.00 15000 Furniture and Equipment 40,316.00 40,316.00 0.00 15500 Leasehold Improvements 506,889.00 506,889.00 0.00 1,399,776.00 1,129,888.00 269,888.00 -1,568,773.00 -1,240,071.00 -328,702.00 378,208.00 437,022.00 -58,814.00 3,206,518.00 2,306,518.00 900,000.00 866,507.20 364,352.20 502,155.00 Total Checking/Savings Accounts Receivable 11000 Accounts Receivable Total Accounts Receivable Other Current Assets 18100 Loan to Shareholder Total Other Current Assets Total Current Assets Fixed Assets 16100 Medical Equipment 17000 Accumulated Depreciation Total Fixed Assets Other Assets 18001 Investment in Big Labs 18050 Investment in R&D Company Total Other Assets 4,073,025.20 2,670,870.20 1,402,155.00 6,512,837.48 4,606,349.48 1,906,488.00 93,648.00 107,245.00 -13,597.00 93,648.00 107,245.00 -13,597.00 39,065.51 34,742.51 4,323.00 39,065.51 34,742.51 4,323.00 20200 Accrued Salaries 28,953.00 26,375.00 2,578.00 Total Other Current Liabilities 28,953.00 26,375.00 2,578.00 161,666.51 168,362.51 -6,696.00 28001 Business Loan 1,207,401.72 1,333,423.72 -126,022.00 Total Long Term Liabilities 1,207,401.72 1,333,423.72 -126,022.00 1,369,068.23 1,501,786.23 -132,718.00 TOTAL ASSETS LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable 20001 Accounts Payable Total Accounts Payable Credit Cards 20100 Credit Cards Total Credit Cards Other Current Liabilities Total Current Liabilities Long Term Liabilities Total Liabilities Page 3 of 4 12:53 PM 10/26/15 Accrual Basis Phoenix Medical Balance Sheet As of December 31, 2014 Dec 31, 14 Dec 31, 13 $ Change Equity 30100 Capital Stock 31400 Shareholder Distributions 32000 Retained Earnings Net Income Total Equity TOTAL LIABILITIES & EQUITY 1,000.00 1,000.00 0.00 -400,000.00 0.00 -400,000.00 3,103,563.25 3,103,563.25 0.00 2,439,206.00 0.00 2,439,206.00 5,143,769.25 3,104,563.25 2,039,206.00 6,512,837.48 4,606,349.48 1,906,488.00 Page 4 of 4