Question

G CO. records 15,000 per year straight-line depreciation on its warehouse. At December 31, 2016, the warehouse cost was $140,000 and $65,000 of depreciation had been taken out. On April 1, 2017, a fire destroyed the warehouse. The insurance company paid G CO. $78,000 to cover the involuntary conversion. G CO. should recognize a

**THE CORRECT ANSWER IS B $6,750 CAN SOMEONE EXPLAIN WHY AND SHOW THE STEPS PLEASE**

a. $62,000 loss

b. $6,750 gain

c. $3,000 gain

d. $18,000 gain

Answer 1

	depreciation expense for three months
	15000*3/12
	3750
	journal entyr
	Account titles & explanation					Debit	Credit
	cash					78,000
	Accumulated depreciaiton			(65000+3750)		68750
	Gain on disposal						6,750
	Warehouse						140,000
	OR
	cash received on sale						78000
	original cost					140,000
	less :Accumulated depreciation					68,750
	book value						71,250
	Gain on sale						6,750