Question

ABO purchased a truck at the beginning of 2018 for

Answer 1

Answer:

B. Debit Loss $5,000.

Explanation:

depreciation per year under straigh-line method:

$\frac{cost- salvage}{useful \: life}$

$\frac{140,000 - 20,000}{6}$

depreciation per year: 20,000

book value at 2019 year-end:

140,000 - 20,000 x 2 = 100,000

disposal value:                95,000

loss for                               5,000

loss at diposal:                      5,000  debit

cash                                      95,000 debit

accumulated depreciation  40,000 debit

                truck                                       140,000 credit