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Gordan Company sold old equipment for $20,000

Accounting

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Gordan Company sold old equipment for $20,000. The equipment had a cost of $50,000 and accumulated depreciation of $25,000. The entry to record the sale of the equipment would include a

1. loss on disposal of $20,000.
2. gain on disposal of $20,000.
3. loss on disposal of $5,000.
4. gain on disposal of $5,000.

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Answer:

c .

Step-by-Step explanation

Loss = Equipment's cost - Accumulated depreciation - Cash received from sale of equipment

= $50,000 - $25,000 - $20,000

= $5,000

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