A machine that cost $36,000 and on which $26,000 of accumulated depreciaion had been recorded was sold for $10,400 cash. Record the journal entries that are necessary to account for this transaction.

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Journal Entries:

1)
Accumulated depreciation A/c Debit $26,000
Machinery A/c Credit $26,000

To write off accumulated depreciation against Machinery/Asset account

2)
Bank A/c Debit $10,400
Machinery A/c Credit $10,000
Profit on sale of Machinery A/c Credit $400

To record sale proceeds and profit on sale

Profit on Sale:

Book value on the date of sale $36,000
Less: Accumulated depreciation till date $26,000

Value of Machine on the date of sale $10,000
Sale Proceeds $10,400

Hence, profit on sale $400