Accounting HELP me i have exam ,help me!!?

Question

A truck that cost $40,000 and on which $30,000 of accumulated depreciation had been recorded was disposed of on July 1, the first day of the new fiscal year. Compute the gain or loss for each disposal (or Prepare entries in journal form to record the disposal under each of the following assumptions):

a. It was discarded as having no value.

b. It was sold for $7,200 cash.

c. It was sold for $13,500 cash.

Answer 1

The book value of the truck is $10,000 { $40,000 cost minus $30,000 depreciation. }

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If it is discarded as having no value, the journal entry would include a debit of $10,000 to an account called something like 'Loss on Disposal of Assets'.

If it is sold for $7,200, then it's also a loss. The journal entry would include a debit of $2,800 to an account called something like 'Loss on Sale of Assets'.

If it is sold for $13,500, then it's a gain.The journal entry would include a credit of $3,500 to an account called something like 'Gain on Sale of Assets'.

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The journal entry for the last case would look something like this:

Debit 'Cash' $13,500

Debit 'Accumulated Depreciation - Vehicles' $30,000

Credit 'Vehicles' $40,000

Credit 'Gain on Sale of Assets' $3,500