Chen Company Chen Company office equipment costs $10,000, has an expected life of four years and a salvage value of $400.The firm has depreciated this asset on a straight-line basis.The firm has recorded depreciation for two years and then sells the equipment at midyear in the third year.
If the Chen Company sells the equipment for $4,600 cash, the entry to record the sale would be as follows:

Question

Quizplus · Accepted Answer

The correct entry to record the sale of the equipment includes debiting Cash for the sale amount ($4,600), debiting Accumulated Depreciation for the amount of depreciation recorded up to the point of sale ($6,000), crediting Equipment for its original cost ($10,000), and recognizing the Gain on Sale of Equipment ($600) to balance the entry. The gain is calculated by subtracting the book value of the equipment at the time of sale from the sale price. The book value is the original cost minus accumulated depreciation.

Chen Company Chen Company Office Equipment Costs $10,000, Has an Expected