Question

Exercise 7-58 (Algorithmic) Disposal of Fixed Asset Perfect Auto Rentals sold one of its cars on January 1, 2019. Perfect had acquired the car on January 1, 2017, for $13,500. At acquisition Perfect assumed that the car would have an estimated life of 3 years and a residual value of $3,000. Assume that Perfect has recorded straight-line depreciation expense for 2017 and 2018. Required: Prepare the journal entry to record the sale of the car assuming the car sold for (a) $6,500 cash, (b) $4,000 cash, and (c) $6,800 cash. The company recorded the car as equipment. If no entry is required, leave the answer boxes blank. a. fill in the blank 2 fill in the blank 3 fill in the blank 5 fill in the blank 6 fill in the blank 8 fill in the blank 9 Record sale of car b. fill in the blank 11 fill in the blank 12 fill in the blank 14 fill in the blank 15 fill in the blank 17 fill in the blank 18 fill in the blank 20 fill in the blank 21 Record sale of car c. fill in the blank 23 fill in the blank 24 fill in the blank 26 fill in the blank 27 fill in the blank 29 fill in the blank 30 fill in the blank 32 fill in the blank 33 Record sale of car

Answer 1

Cost = $13,500

Estimated useful life = 3 years

Residual Value = $3,000

Depreciation per year = (Cost - Residual Value) / Estimated useful life

= (13,500 - 3,000) / 3

= $3,500

January 1, 2017 to January 1, 2019 = 2 years

Accumulated Depreciation for 2 years = 3,500 * 2 = $7,000