Headland Corporation owns machinery that cost $20,000 when purchased on July 1, 2007. Depreciation has been recorded at a rate of $2,400 per year, resulting in a balance in accumulated depreciation of $8,400 at December 31, 2010. The machinery is sold on September 1, 2011, for $10,500.Prepare journal entries to:A) Update depreciation for 2011B) Record the sale

Journal Entries to:

A) Update depreciation for 2011

                                                  Dr.            Cr.

Depreciation Expenses           $1,600

Accumulated Depreciation                   $1,600

B) Record the sale

                                                  Dr.            Cr.

Cash                                      $10,500

Accumulated Depreciation  $10,000

Profit on Sale                                        $500

machinery Account                              $20,000

Explanation:

A)  Depreciation for the year 2011 = $2,400 x (8/12) =$1,600

B) Accumulated Depreciation = ( $2,400 x 3.5 ) + 1600 = $10,000