Equipment with an estimated residual value at acquisition of $15,000 was sold on

Question

Equipment with an estimated residual value at acquisition of $15,000 was sold on December 31, 2013, for $20,000 cash. The following data were available at the time of sale:

$100,000

85,000

When this transaction is recorded, it should include a

credit of $5,000 to the Gain on Disposal account.

debit of $80,000 to the Loss on Disposal account.

debit of $20,000 to the Accumulated Depreciation account.

credit of $20,000 to the Equipment account.

$100,000

85,000

Explanation / Answer

Answer. Credit to $5000 to Gain on Disposal Account Explanation: Journal Entry: Cash Account Dr. 20,000 Accumulated Depreciation Dr. 85,000          Equipment Account 100,000          Gain On disposal Account 5,000

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