Question

FedEx is the world's leading express-distribution company. In addition to the world's largest fleet of all cargo aircraft, the company has more than 668 aircraft and 54,000 vehicles and trailers that pick up and deliver packages. Assume that FedEx sold a delivery truck that had been used in the business for three years. The records of the company reflected the following:
Delivery truck cost $56,000
Accumulated depreciation $41,300

Required:
Prepare the journal entry for the disposal of the truck, assuming that the truck sold for:
a. $14,700 cash
b. $16,400 cash
c. $12,900 cash
(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer:

Journal entries

Explanation:

Before passing the journal entries, first we have to determine the book value of truck which is

= Cost of delivery truck - accumulated depreciation

= $56,000 - $41,300

=  $14,700

Now the journal entries are as follows

a. Cash Dr $14,700

Accumulate depreciation $41,300

      To Delivery truck $56,000

(Being the disposal of the truck is recorded)

b)  Cash Dr $16,400

Accumulate depreciation $41,300

      To Delivery truck $56,000

       To Gain on sale $1,700

(Being the disposal of the truck is recorded)

c) Cash Dr $12,900

Accumulate depreciation $41,300

Loss on sale $1,800

      To Delivery truck $56,000

(Being the disposal of the truck is recorded)