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18 June, 07:14

A city paid $40,000 for police cars with the expectation that they would have a useful life of 4 years. After 3 years, the city sold the cars for $3,000. How should the city account for the sale in the General Fund?

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  1. 18 June, 09:43
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    Journal entry

    Explanation:

    The journal entry is as follows

    Cash $5,000

    To other financing source - sale of capital assets $5000

    (Being the sale in the general fund is recorded)

    For recording this transaction we debited the cash account as it increases the asset account while credited the other financing source - sale of capital assets
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