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Explain accounting steps for the sale and retirement of property, plant and equipments and record journal entries for the following transactions
Explain accounting steps for the sale and retirement of property, plant and equipments and record journal entries for the following transactions.
On 1st July 2002, Jessica Ltd purchased equipments for $130000 cash. It was estimated that the equipments would have a salvage value of $ 10000 and a useful life of six years. The corporation uses straight line method of amortization and has a December 31 year end.
Record the disposal of equipments on July 1 2006, under each of the following independent situations:
1. it was sold for $35500
2. It was sold for $42000
3. It was retired.
Expert Solution
please see the attached file.for full solution.
1. Accounting steps of sale and retirement of property are fully explained in theoretical terms with examples and necessary working in the following order.
(a) Updating amortization
(b) Calculating Net book value
(c) Calculating Gain or Loss on disposal of asset
(d) Accounting steps involved for sale and retirement of asset.
2.
(a)General Journal entries for sale of equipments- requirement No 1 of the problem.
(b) General Journal entries for requirement No 2 of the problem.
(c) General Journal entries for requirement No 3 of the problem.
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