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Disposal of an Operating Asset
Jolie Company owns equipment with a cost of $397,500 and accumulated depreciation of $131,175.
Required:
Prepare the journal entry to record the disposal of the equipment on April 9 assuming:
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1.  Jolie sold the equipment for $287,600 cash. If an amount box does not require an entry, leave it blank.
Apr. 9

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2.  Jolie sold the equipment for $247,700 cash. If an amount box does not require an entry, leave it blank.
Apr. 9

To prepare the journal entries for the disposal of the equipment by Jolie Company, we first need to calculate the book value of the equipment and then determine the gain or loss on disposal for each scenario.

### Book Value Calculation
- **Cost of Equipment:** $397,500
- **Accumulated Depreciation:** $131,175
- **Book Value:** Cost - Accumulated Depreciation = $397,500 - $131,175 = $266,325

### 1. **Equipment Sold for $287,600 Cash**
- **Cash Received:** $287,600
- **Book Value:** $266,325
- **Gain on Disposal:** Cash Received - Book Value = $287,600 - $266,325 = $21,275

**Journal Entry:**
```
Apr. 9
   Cash                                   287,600
   Accumulated Depreciation               131,175
   Gain on Disposal of Equipment            21,275
   Equipment                               397,500
```

### 2. **Equipment Sold for $247,700 Cash**
- **Cash Received:** $247,700
- **Book Value:** $266,325
- **Loss on Disposal:** Book Value - Cash Received = $266,325 - $247,700 = $18,625

**Journal Entry:**
```
Apr. 9
   Cash                                   247,700
   Accumulated Depreciation               131,175
   Loss on Disposal of Equipment           18,625
   Equipment                               397,500
```

### Summary of Journal Entries
1. For the sale of equipment for $287,600:
   - Cash: $287,600
   - Gain on Disposal: $21,275

2. For the sale of equipment for $247,700:
   - Cash: $247,700
   - Loss on Disposal: $18,625

Would you like further details on any of these entries or have other questions? Here are some related questions to consider:

1. What other factors should be considered when disposing of an asset?
2. How does accumulated depreciation affect the net income when recording the disposal?
3. What are the tax implications of gains and losses on asset disposals?
4. How should Jolie record the disposal if they decide to donate the equipment instead?
5. What is the impact on cash flow from the sale of the equipment? 

**Tip:** Always ensure that the gain or loss is calculated correctly to accurately reflect on financial statements.

Jolie Company owns equipment with a cost of $397,500 and accumulated depreciation of $131,175. Prepare the journal entry to record the disposal of the equipment on April 9 assuming Jolie sold the equipment for $287,600 cash and for $247,700 cash.

Explore the detailed journal entries for Jolie Company's equipment disposal. This includes calculations for selling the asset for $287,600 and $247,700 cash, highlighting gains and losses on the transactions.

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