Question

On December 29, 2019, Patel Products, Inc., sells a delivery van that cost $20,000. After recording the entry to bring the accumulated depreciation up-to-date, the delivery van had accumulated depreciation of $18,000. Patel received $2,000 cash from the purchaser of the delivery van.

Answer 1

Answer:

The debit balance for the vehicles account was $20,000, and the credit balance of accumulated depreciation account was $18,000.

• Dr Vehicles account 20,000
• Cr Accumulated Depreciation Vehicles account 18,000

then the van was sold for $2,000

• Dr Cash account 2,000
• Cr vehicles account 2,000

Since the carrying value of the van was $2,000 (= $20,000 - $18,000) and the van was sold for $2,000, Patel had no gain or loss from this transaction.