Question

On December 29, 2015, 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 $1,500 cash from the purchaser of the delivery van. Complete the necessary journal entry to record the sale by selecting the account names and dollar amounts from the drop-down menus.

Answer 1

Answer:

cash                                                 1,500 debit

accumulated depreciation- VAN 18,000 debit

loss at disposal                                  500 debit

                VAN                                                     20,000 credit

Explanation:

The journal entry must remove the van and their associate account from the company's books.

Therefore, will write-off van account and the accumulated depreciation.

Patel is receiving cash by the amount of 1,500 dollars. It will post the receipts as a debit to this account.

The difference will be considered gain/loss at disposal.

In this case, as the amount received 1,500

is lower than book value: 20,000 - 18,000 = 2,000

it will be a loss at disposal