.. Property and equipment data From the balance sheets: 12/31/20 12/31/19 $ 22,840 Property and equipment Accumulated depreciation 24,360 $ (17,230) (15,840) From the investing activities section of the 2020 cash flow statement: Cash used to purchase property and equipment $ (2,280) Proceeds from sale of property and equipment 62 From the 2020 income statement: Depreciation expense $ 1,710 Gain or loss on the sale of equipment ?? Requirements ... 1. T-accounts for Property and Equipment and Accumulated Depreciation have been opened for you. Enter information as presented, and solve for the unknown in each account. 2. Based on your calculations in requirement 1, calculate the carrying amount of assets sold during 2020. What is the difference between the sales price and the carrying amount? 3. Prepare the journal entry for the sale of property and equipment during 2020. Describe the effect of this transaction on the financial statements. Compare the sales price and the carrying amount in the journal entry, and compare this to the difference you calculated in requirement 2. Describe briefly. 4. Prepare a T-account for Property and Equipment, Net. Repeat requirement 1. Begin by posting to the Property and Equipment account. 12/31/19 Balance 62 Purchased during 2020 Property and Equipment 22,840 | Cost of assets sold in 2020 2,280 || Accum. depr. of assets sold Depreciation during 2020 24,360 320 378 12/31/20 Balance Now post to the Accumulated Depreciation account. Accumulated Depreciation Accum. depr. of assets sold 320||12/31/19 Balance 15,840 1,710 Depreciation during 2020 12/31/20 Balance 17,230 Requirement 2. Based on your calculations in Requirement 1, calculate the carrying amount of assets sold during 2020. What is the difference between the sales price and the carrying amount? statement.) The carrying amount of assets sold during 2020 is million. There is a of $ million. This results because t during 2020. Describe the effect of this transaction on the financial statements. Compare the sales price and the s in millions as provided in the problem statement. Record debits first, then credits. Exclude explanations the sales price is greater than the carrying amount. g 2020 the sales price is less than the carrying amount. radi Requirement 3. Prepare the journal entry for the sale of property and equipment during 2020. Describe th the difference you calculated in Requirement 2. Describe briefly. (Enter amounts in millions as provided Begin by preparing the journal entry for the sale of property and equipment during 2020. Journal Entry Accounts Date Debit Credit Describe t Compare the sales price and the carryin Assets Accumulated Depreciation ders' equity Revenues The total Cash nillion the sales price of This is [ nt 2. Depreciation Expense Requirem Net. Repeat Requirement 1. (Enter am Gain on Sale of Assets int, Net Loss on Sale of Assets Property and Equipment Describe the effect of this transaction on the financial statements. Compare the sales price and the carrying amount in the journal entry, and compare this to the difference calculated in Requirement 2; describe briefly. Assets liabilities and shareholders' equity Revenues expenses and net income The total carrying amount of $ million is $ million the sales price of $ million This is calculation than/(as) in Requirement 2. is unaffected Requirement 4. Prepare a T-account for Property and Equipment, Net. Repeat Requirement 1. (Enter amounts in millions as provided in the problem statement.) decreases. 1,710 increases. 12/31/19 Balance Purchased during 2020 Property and Equipment, Net 7,000 Depreciation during 2020 2,280 | Accum. depr. of assets sold Carrying amount of assets sold in 2020 7,130 62 378 12/31/20 Balance
