Question

On December 31, Strike Company has decided to discard one of its batting cages. The initial cost of the equipment was $219,818.00 with an accumulated depreciation of $197,836.20. Depreciation has been taken up to the end of the year. The following will be included in the entry to record the disposal.
Select the correct answer.

Equipment Cr. $219,818.00

Loss on Disposal of Asset Dr. $197,836.20

Accumulated Depreciation Dr. $219,818.00

Gain on Disposal of Asset Cr. $21,981.80

Answer 1

\Answer:

Equipment Cr. $219818.00 is the correct answer.

Explanation:

The asset costed $219818 and when an asset is disposed off, it is written off from the books and its account is closed. The cost of asset is credited in the asset account. Thus, $219818.00 will be credited.

The amount of sales proceed is unknown so we cannot determine if the asset was sold for a loss or gain. Thu option b and d cannot be the right answer.

The amount of accumulated depreciation is given till year end as $197836.20 and this amount will be debited in the correct entry. Thus option c is incorrect.