Question

On December 31, Strike Company has decided to discard one of its batting cages. The equipment had an initial cost of $236,300 and has accumulated depreciation of $212,670. Depreciation has been recorded up to the end of the year. Which of the following will be included in the entry to record the disposal?
a.Accumulated Depreciation, debit, $229,100
b.Gain on Disposal of Asset, credit, $22,910
c.Equipment, credit, $229,100
d.Loss on Disposal of Asset, debit, $206,190

Answer 1

Answer:

Equipment, credit, $229,100

Explanation:

we record the entry when we purchase the equipment is

we debit the equipment, and credit the cash/accounts payable depending on whether we paid the cash or purchased the equipment on account.

We debit the equipment because equipment is our asset, and when asset goes up we debit them. We credit the cash because again cash is our asset and when asset goes down we credit them.

Now at the time of disposal, we want to remove the asset from our balance sheet. Equipment is disposed now. In other words, equipment is our asset, and disposing the equipment means asset goes down, and we show this effect by credit the equipment.