Grace Company owns equipment that cost $70,000 when purchased on January 1, 2019. It has been depreciated using the straight-line method based on estimated salvage value of $7,000 and an estimated useful life of 7 years.

Instructions:

Prepare Grace Companys journal entries to record the sale of the equipment in these four independent situations. Update depreciation on assets disposed of at time of sale.

1. Sold for $40,000 on January 1, 2022.

ANSWER:

2. Sold for $40,000 on April 1, 2022.

ANSWER:

3. Sold for $15,000 on January 1, 2022.

ANSWER:

(d) Sold for $15,000 on September 1, 2022.