Gaston owns equipment that cost $17,000 with accumulated depreciation of $3,400. Gaston sells the equipment for $12,200. Which of the following would not be part of the journal entry to record the disposal of the equipment? Multiple Choice Debit Accumulated Depreciation $3,400. Debit Loss on Disposal of Equipment $1,400. Credit Equipment $17,000. Debit Cash $12,200. Credit Gain on Disposal of Equipment $1,400.

Question

Business

Dominik Richmond

17 November, 11:00

Gaston owns equipment that cost $17,000 with accumulated depreciation of $3,400. Gaston sells the equipment for $12,200. Which of the following would not be part of the journal entry to record the disposal of the equipment? Multiple Choice Debit Accumulated Depreciation $3,400. Debit Loss on Disposal of Equipment $1,400. Credit Equipment $17,000. Debit Cash $12,200. Credit Gain on Disposal of Equipment $1,400.

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Answers (1)

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Ingrid Owens · Answer 1

Credit gain on disposal of equipment $1400 will not be a part of the journal entry

Explanation:

The carrying value is the value of an asset in books which is net of accumulated depreciation. The equipment of Gaston has a carrying value of = 17000 - 3400 = 13600 on the day of sale.

The gain or loss on disposal is calculated by deducting the carrying value from the sales proceeds of the asset. Thus, the gain/loss on sale of the asset is,

12200 - 13600 = - $1400 or a loss on disposal of $1400

Thus, the entry to record the disposal is,

Cash $12200 Dr

Accumulated depreciation $3400 Dr

Loss on disposal $1400 Dr

Equipment $17000 Cr