Swifty Corporation sells equipment on September 30, 2020, for $16,900 cash. The equipment originally cost $71,300 and as of January 1, 2020, had accumulated depreciation of $42,000. Depreciation for the first 9 months of 2020 is $5,150.
Prepare the journal entries to (a) update depreciation to September 30, 2015, and (b) record the sale of the equipment.

a)

30 September 2020  Depreciation expense                 $5150 Dr

                                         Accumulated Depreciation        $5150 Cr

b)

30 September 2020  Cash                                         $16900 Dr

                                    Accumulated Depreciation    $47150 Dr

                                    Loss on Disposal                     $7250 Dr

                                               Equipment                          $71300 Cr

Explanation:

a.

we will record the first nine months 2020 depreciation expense and credit the accumulated depreciation account by this amount to update the account.

b.

We will calculate the accumulated depreciation amount till 30 september 2020 = 42000 + 5150 = 47150

The carrying value of the equipment = 71300 - 47150 = 24150

The loss on disposal = 16900 - 24150 = 7250

The cash received, loss on disposal and accumulated depreciation account will be debited and the equipment account will be debited.