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Martinez owns machinery that cost $87,000 with accumulated depreciation of $40,000
Martinez owns machinery that cost $87,000 with accumulated depreciation of $40,000. The company sells the machinery for cash of $42,000. The journal entry to record the sale would include:
A debit to Cash of $42,000
A credit to Gain on Sale of $2,000
A debit to Accumulated Depreciation of $47,000
A credit to Machinery of $47,000
A credit to Accumulated Depreciation of $40,000
Expert Solution
Answer:
Book value as on date of sale=Cost-Accumulated depreciation
=87,000-40,000=$47,000
Hence since sale proceeds is lesser than book value as on date of sale;
Hence loss =(47,000-42,000)=$5000
journal entry:
Cash a/c...Dr$42,000
accumulated depreciation a/c...Dr$40,000
Loss on sale a/c...Dr$5000
To machinery $87,000
Hence the correct option is:
A debit to Cash of $42,000
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