Question

Abbott Landscaping purchased a tractor at a cost of $38,000 and sold it three years later for $19,300. 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. Exercise 7-17A Part 2 2. Assume the tractor was sold for $12.100 instead of $19,300. Record the sale. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the sale of equipment. Note: Enter debits before credits Transaction General Journal

Answer 1

SOLUTION

Depreciation = (Cost - Residual value) / Estimated useful life

= (38,000 - 2,500) / 5 = 7,100 per year

Accumulated depreciation for 3 years = 7,100 * 3 = $21,300

Journal entry-

Transaction	General Journal	Debit ($)	Credit ($)
1.	Cash	12,100
	Accumulated depreciation	21,300
	Loss on sale	4,600
	Equipment		38,000
	(To record sale of Equipment)