Crane company sells office equipment on july 31, 2022, for $21,850 cash. the office equipment originally cost $77,730 and as of january 1, 2022, had accumulated depreciation of $39,740. depreciation for the first 7 months of 2022 is $4,030. prepare the journal entries to (a) update depreciation to july 31, 2022, and (b) record the sale of the equipment.

Explanation:

The journal entries are shown below:

a. Depreciation Expense A/c Dr $4,030

          To Accumulated Depreciation - Machinery A/c $4,030

(Being depreciation expense is recorded)

b. Cash A/c Dr $21,850

Accumulated Depreciation - Office equipment A/c  $43,770

Loss on Disposal of Office equipment A/c $12,110

                To Office equipment A/c $77,730

(Being sale of machinery is recorded and the remaining balance is debited to the loss on Disposal of office equipment A/c)

The accumulated depreciation is computed below:

= $39,740 + $4,030

= $43,770

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