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    Cooper90's Avatar
    Cooper90 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Mar 30, 2014, 10:26 AM
    What entry would Forgetta make to record the sale of the equipment for $33,380 cash
    They have old equipment that cost $56,210. The equipment has accumulated depreciation of $27,360 and a fair value of $33,380. They have decided to sell the equipment.
    Fidget1's Avatar
    Fidget1 Posts: 105, Reputation: 4
    Junior Member
    		  
    #2

    Apr 1, 2014, 10:50 AM
    You have to write the asset out of the books, record the cash receipt, and account for the gain/loss on disposal. Using a disposal account will help you keep track of things:

    Dr: Disposal A/c - $56,210
    Cr: Asset A/c - $56,210

    This writes out the asset

    Dr: Accumulated Dep'n - $27,360
    Cr: Disposal A/c - $27,360

    This writes out the accumulated dep'n

    Dr: Bank Account - $33,380
    Cr: Disposal A/c - $33,380

    This records the cash received

    Dr: Disposal Account - $4530*
    Cr: P&L - Gain on disposal $4530

    This records the gain/loss on disposal

    * this is the balance on the disposal account which represents the gain or loss on disposal. It's a gain in this case as the asset sold for $33,380 and its book value was $28,850 ($56,210 - $27,360)
    sgupta2014's Avatar
    sgupta2014 Posts: 2, Reputation: 1
    New Member
    		  
    #3

    Apr 19, 2014, 06:45 PM
    DR Cash 33,380.00
    DR Acc dep 27,360.00
    CR Gain on disposal 4,530.00
    CR Asset 56,210.00
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