|Purpose:||(L.O. 4) This exercise will (1) illustrate several different ways in which you may dispose of property, and (2) discuss the appropriate accounting procedures for each.|
Presented below is a schedule of property dispositions for Barbara Steiner Co. during 2014:
SCHEDULE OF PROPERTY DISPOSITIONS
The following additional information is available:
Furniture. On January 1, 2014, furniture was tossed out in the dumpster because it was no longer adequate to serve the company's needs. It cost $10,000 when it was acquired. Depreciation of $8,800 was taken in prior years.
Automobile. On January 2, 2014, an automobile was sold for $3,100 cash. It had a cost of $8,000, and total depreciation recorded prior to the sale date amounted to $3,500.
Land. On February 15, 2014, land previously used in operations was subdivided and a section was sold for $100,000. A commission of $8,000 went to a real estate agent. The original cost of that land segment was $40,000.
Prepare the appropriate journal entry for each of the dispositions. Show computations where appropriate.
TIP: The disposal of property, plant, and equipment should be accounted for as follows: