Manchester Company sells equipment on June 1 of the current year for $278,000 cash. Manchester incurred $1,600 of removal and selling costs on disposal. The equipment cost $500,000 when it was purchased on January 2, approximately three years and five months earlier. Its estimated residual value and useful life were $80,000 and 10 years, respectively. Manchester uses straight-line depreciation and records annual depreciation on each December 31. a. Prepare the journal entries needed to record the asset disposal on June 1, of the current year. Hint: First record the update for depreciation expense.

b. Record the journal entries if the equipment were abandoned (zero fair value) on June 1, of the current year. Hint: First record the update for depreciation expense.