Question

•ABC Realty Corp. purchased a truck for $100,000 on 1/1/2014. •On 6/30/16 when the accumulated depreciation...

•ABC Realty Corp. purchased a truck for $100,000 on 1/1/2014.

•On 6/30/16 when the accumulated depreciation was $40,000 it was sold for $80,000.

•Question:

1.Present the journal entries recorded by the company for the truck purchase in 2014.

2.What is the gain or loss on the sale?

3.Present the journal entry to record the sale and gain/loss of the truck.  

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Answer #1
JOURNAL ENTRY FOR PIURCHASE OF FIXED ASSET
Date Account Debit Credit
01-Jan-14 Fixed Asset $1,00,000
Cash $1,00,000
JOURNAL ENTRY FOR DEPRECIATION
30-Jun-16 Depreciation Expense $40,000
Accumulated Depreciaton $40,000
JOURNAL ENTRY FOR GAIN ON FIXED ASSET
30-Jun-16 Cash $80,000
Accumulated Depreciaton $20,000
Fixed Asset $1,00,000
Gain on Sale of Fixed Asset

$20,000
2) Gain on the sale of truck is $20,000
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