a)
Gain on disposal=$12,900
b)
Loss on disposal=$5,900
Prepare a tabular summary to show the cost of equipment disposed of, the accumulated depreciation, and gain or loss recorded on disposal?
Note that initially when the equipment was purchased, it would be debited to an asset account, whereas, it would be credited upon disposal since the company no longer owns it.
The accumulated depreciation was originally a credit entry in the balance sheet and needs to be debited now that the equipment has been sold.
Note that the excess of the sum of the accumulated depreciation and the cash received over the initial cost of the equipment is a gain and the reverse means a loss was recorded on disposal.
Account DR CR
Asset $49,600
Gain on disposal $12,900
Accumulated depreciation $24,600
Cash received $37,900
gain on disposal=$24,600+$37,900-$49,600
gain on disposal=$12,900
Account DR CR
Asset $49,600
Accumulated depreciation $24,600
Cash received $19,100
Loss on disposal $5,900
Loss on disposal=$49,600-$24600-$19,100
Loss on disposal=$5,900
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