Answer:
1.Dr Cash 21,000
Dr Accumulated depreciation - equipment 25,200
Cr Equipment 45,000
Cr Gain on sale of equipment 1,200
2.Dr Cash 16,600
Dr Accumulated depreciation - equipment 25,200
Dr Loss on sale of equipment 3,000
Cr Equipment 44,800
Explanation:
1.Preparation of Abbott Landscaping Record of sales
Since Abbott Landscaping tractor cost $45,000 and later sold for $21,000 after three years in which he recorded depreciation using the straight-line method with a five-year service life, and a $3,000 residual this mean the record of the sales will be:
Dr Cash 21,000
Dr Accumulated depreciation - equipment 25,200
Cr Equipment 45,000
Cr Gain on sale of equipment 1,200
2. Preparation to record the entry assume the tractor was sold for $16,600 instead of $21,000
Since we are Assuming that the tractor was sold for $16,600 instead of $21,000 this means the transaction will be recorded as:
Dr Cash 16,600
Dr Accumulated depreciation - equipment 25,200
Dr Loss on sale of equipment 3,000
Cr Equipment 44,800
Calculation for Accumulated depreciation = [($45,000 - $3,000)/ 5] x 3
=25,200
