Question

The following information applies to questions 7 – 9:

A truck that cost $18,000 and on which $16,000 of accumulated depreciation has been recorded was sold on January 1, the first day of the year.

7. Assume the truck was sold for $2,500 cash. The entry to record the sale would include:

		a. a credit to the Accumulated Depreciation account for $16,000
		b. a debit to Gain on Disposal of $500
		c. a credit to the Truck account for $18,000
		d. a credit to Cash for $2,500

8. Assume the truck was sold for $1,500 cash. The entry to record the sale would include:

		a. a debit to the Accumulated Depreciation account for $2,000
		b. a credit to Cash for $1,500
		c. a debit to Loss on Disposal of $500
		d. a debit to the Truck account for $18,000

9. Assume the truck was traded for new equipment valued at $10,000 and that a $2,200 trade-in allowance was given for the old truck. The entry to record the exchange would include:

		a. a credit to the Truck account for $2,200
		b. a credit to the Equipment account for $10,000
		c. a debit to Loss on Disposal for $200
		d. a credit to Cash for $7,800

12. Jones Co. borrows $30,000 from the bank at 9% interest on August 31. Jones' journal entry to record accrued interest on the note on September 30 would include (use a 365-day year):

		a. a debit to Interest Expense for $221.92
		b. a credit to Interest Revenue for $225.00
		c. a debit to interest Receivable for $225.00
		d. a debit to Interest Payable for $221.92

Answer 1