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    philly75's Avatar
    philly75 Posts: 2, Reputation: 1
    New Member
    		  
    #1

    Jan 2, 2009, 02:25 PM
    Offset for Owner's Equity
    I have a business that sold a piece of equipment for $8000. I am trying to T account it:

    Equipment
    Credit $8000 (1)

    Cash
    Debit $8000 (1)

    ??
    Credit $8000 (2)

    Owner's Equity
    Debit $8000 (2)


    What I am missing is what T account the Owner's Equity comes from. I cannot remember which one this should come out of.
    de_de_gc's Avatar
    de_de_gc Posts: 66, Reputation: 4
    Junior Member
    		  
    #2

    Jan 2, 2009, 05:26 PM

    philly75, there should not be an adjustment to owner's equity.

    The asset was traded for another asset, namely cash.

    You should remove any accumulated depreciation taken on the equipment and book either a gain or loss on the sale of the equipment.

    See if this makes since to you:

    (1) Equipment - credit
    (1) accumulated depreciation - debit
    (1) Cash - debit
    (1) Loss or gain on sale of asset - <debit> or credit

    The loss or gain is sales price minus basis in equipment.
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