Question

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.

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

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

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

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

Answer 1

Q1
Journal entry:
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Accumulated depreciation		16000
	Cash account			2500
	Gain on disposal				500
	Truck account				18000
	(for sale of equipment)
Answer is c. Credit to Truck account for $18000
Q2.
Journal entry:
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Accumulated depreciation		16000
	Cash account			1500
	Loss on disposal			500
	Truck account				18000
	(for sale of equipment)
Answer is c. Debit to loss on disposal $500.
Q3.
Journal entry:
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Accumulated depreciation		16000
	New Truck account			10000
	Gain on disposal				200
	Cash account				7800
	Truck account				18000
	(for sale of equipment)
Answer is d. a credit to cash $7800.