Abbott Landscaping purchased a tractor at a cost of $40,000 and sold it three ye

Question

Abbott Landscaping purchased a tractor at a cost of $40,000 and sold it three years later for $20,300. Abbott recorded depreciation using the straight-line method, a five-year service life, and a $2,500 residual value. Tractors are included in the Equipment account. References Section Break Exercise 7-17 Record the sale of equipment (LO7-6) value: 0.62 points Required information Exercise 7-17 Part 1 Required 1. Record the sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Transaction General Journal Debit Credit Cash Accumulated depreciation Equipment Gain

Explanation / Answer

1) Record the sale General journal Debit Credit Cash 20,300 Accumulated depreciation 22500 Equipment 40,000 Gain 2,800 (40,000-2,500)/5 = 7500 dep for three year 7500*3 2) Cash 12,700 Accumulated depreciation 22,500 loss 4,800 Equipment 40,000

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