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Skysong, Inc. sells office equipment on July 31, 2022, for $17,400 cash. The office equipment originally cost $72,400 and as of January 1, 2022, had accumulated depreciation of $42,300. Depreciation for the first 7 months of 2022 is $5,250. Prepare the journal entries to (a) update depreciation to July 31, 2022, and (b) record the sale of the equipment.

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Answer:

(a) update depreciation to July 31, 2022

Debit : Depreciation expense  $5,250

Credit : Accumulated depreciation $5,250

(b) record the sale of the equipment.

Debit : Accumulated depreciation $47,550

Debit : Cash $17,400

Debit : Profit and Loss $7,450

Credit : Cost $72,400

Explanation:

Accumulated Depreciation is the total depreciation charged on the asset during its tie in use in the business Accumulated depreciation is $47,550 ($42,300 + $5,250 ).

The Sale has resulted in a loss of $7,450 ($72,400 - $17400 - $47,550)

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