Question

Movelt Corporation is the world's leading express-distribution company. In addition to its 643 aircraft, the company has more than 57,000 ground vehicles that pick up and deliver packages. Assume that Movelt sold a delivery truck for $10,000. Movelt had originally purchased the truck for $16,000 and had recorded depreciation for three years. Required: 1. Calculate the amount of gain or loss on disposal, assuming that Accumulated Depreciation was (a) $6,000, (b) $5,000, and (c) $10,000. (Select "None" if there is no Gain or Loss.) Gain/Loss a. None Amount $ 0

Answer 1

TAIL genera Copy ormat Painter BIU.612A=== € 5 Merge & Center - $ - % Dard Font Alignment Number : X ✓ fx BC D Particular . . Purchase price of the truck [A] Less: Accumulated Depreciation B] Net book Value CA-B 16,000 $ (6,000) $ 10,000 $ 16,000 $ (5,000) $ 11,000 $ 16,000 (10,000) 6,000 . Sales price [D] Less: Net book value [C] Gain/(Loss) D-C $ $ 10,000 $ 10,000 $ $ 10,000 11,000 $ (1,000) $ Amount → a. Gain/Loss None Loss Gain кл - 1,000 4,000 40 Journal Entry

x ✓ fx Journal Entry Fransaction Particulars Debit Credit 10,000 6,000 Cash a/c Accumulated Depreciation a/c To Fixed Asset (Truck) a/c (Being vehicle sold) $ 16,000 Cash a/c Accumulat Depreciation a/c Loss on sale of Truck a/c To Fixed Asset (Truck) a/c (Being vehicle sold) 10.000 5,000 1,000 $ 16,000 Cash a/c 10,000 1000 Accumulated an action

$ 16,000 To Fixed Asset Truck a/c (Being vehicle sold) $ $ 10,000 10,000 Cash a/c Accumulated Depreciation a/c To Fixed Asset (Truck) a/c To Profit on sale of Truck a/c (Being vehe sold) $ $ 16,000 4,000 Note: If the vehicle is sold on credit then debit receivable account instead of cash account. Profit or loss on sale of truck should be transferred to profit and loss account.