Show all work/explanations for full credit ! An assets was purchased for $ 12,00
ID: 2347093 • Letter: S
Question
Show all work/explanations for full credit !
An assets was purchased for $ 12,000. The asset's estimated useful life was 5 years, and its residual value was $2,000. Straight - line depreciation was used. How much gain or loss is reported if the asset is sold for $9,000 at the end of the first year? $2,000 loss $1,000 loss $1,000 gain No gain or loss Kelly Petroleum Products owns furniture that was purchased for $19,600. Accumulate depreciation is $17,300. The furniture was sold for $3,800. Which of the following is the current entry to record the transaction? Furniture 19,600 Cash 2,700 Gain on sale 5,000 Accumulate depreciation 17,300 Furniture 19,600 Gain on sale 3,800 Cash 2,700 Accumulated depreciation 17,300 Accumulated depreciation 17,300 Cash 3,800 Gain on sale 1,500 Furniture 19,600Explanation / Answer
1 B Annual depreciation is (12,000-2,000)/5= 2,000 per year. So after 1 year the net book value is 12,000-2,000=10,000. So if it is sold for 9,000 the loss will be 1,000. 2. D Reverse the entries to take accumulated depreciation and furniture off the books. (19,600 CR to furniture, 17,300 DR to Accumulated depreciation). The sales price is debited for 3,800 to cash. So there is a 1,500 gain that is credited to gain on sale.