Answer :
Answer:
1-a. Debit Cash for $12,000; Debit Accumulated depreciation - Truck for $23,000; and Credit Equipment - Truck for $35,000.
1-b. Debit Cash for $12,400; Debit Accumulated depreciation - Truck for $23,000; Credit Gain on sale of equipment for $400; and Credit Equipment - Truck for $35,000.
1-c. Debit Cash for $11,500; Debit Accumulated depreciation - Truck for $23,000; Debit Loss on sale of equipment for $500; and Credit Equipment - Truck for $35,000.
2-a. The disposal the asset (Delivery truck) for $12,000 cash results into neither gain nor loss.
2-b. The disposal the asset (Delivery truck) for $12,400 cash results into a gain of $400.
2-b. The disposal the asset (Delivery truck) for $11,500 cash results into a loss of $500.
Explanation:
1-a. Give the journal entry for the disposal of the truck, assuming that the truck sold for $12,000 cash.
Gain or loss on the disposal of delivery truck = Cash - (Delivery truck cost - Accumulated depreciation) = $12,000 - ($35,000 - $23,000) = $12,000 - $12,000 = $0
Therefore, the journal entries will look as follows:
Particulars Debit ($) Credit ($)
Cash 12,000
Accumulated depreciation - Truck 23,000
Equipment - Truck 35,000
(To record the disposal of delivery truck.)
1-b. Give the journal entry for the disposal of the truck, assuming that the truck sold for $12,400 cash.
Gain or loss on the disposal of delivery truck = Cash - (Delivery truck cost - Accumulated depreciation) = $12,400 - ($35,000 - $23,000) = $12,400 - $12,000 = $400 gain
Therefore, the journal entries will look as follows:
Particulars Debit ($) Credit ($)
Cash 12,400
Accumulated depreciation - Truck 23,000
Gain on sale of equipment 400
Equipment - Truck 35,000
(To record the disposal of delivery truck.)
1-c. Give the journal entry for the disposal of the truck, assuming that the truck sold for $11,500 cash.
Gain or loss on the disposal of delivery truck = Cash - (Delivery truck cost - Accumulated depreciation) = $11,500 - ($35,000 - $23,000) = $11,500 - $12,000 = $500 loss
Therefore, the journal entries will look as follows:
Particulars Debit ($) Credit ($)
Cash 11,500
Accumulated depreciation - Truck 23,000
Loss on sale of equipment 500
Equipment - Truck 35,000
(To record the disposal of delivery truck.)
2. Based on the three preceding situations, explain the effects of the disposal of an asset.
2-a. The disposal the asset (Delivery truck) for $12,000 cash results into neither gain nor loss.
2-b. The disposal the asset (Delivery truck) for $12,400 cash results into a gain of $400.
2-b. The disposal the asset (Delivery truck) for $11,500 cash results into a loss of $500.