Question

Question 1 2 pts Information on a depreciable asset is as follows: Purchase date 1/1/2015 Purchase price $45,000 $5,000 Salvage value Useful life 8 years Depreciation method straight-line If the asset is sold on July 1, 2019 for $20,000, the journal entry to record the sale will include: (Note: Remember to calculate the depreciation taken to the date of sale.) Acredit to cash for $20,000. Adebit to loss on sale for $2,500. A debit to accumulated depreciation for $25,000. . None of the choices are correct statements. A credit to loss on sale for $2,500.

Answer 1

answer: A Debit to loss on sale for $2500 explanation straight line method explanation equipment 45,000 residual value 5,000 life straight line depreciation = asset cost- residual value ) /life 5000 years 2015 depreciation 2016 depreciation 2017 depreciation 2018 depreciation 2019 dep ( for 6 months) total accumulated depreciation book value on july 1 2019 sold asset for loss on sale of asset 5000 5000 5000 5000 2500 22500 22,500 20000 2,500 credit journal entry for transaction of sale debit debit to cash 20000 debit to loss on sale of for 22500 credit to equipment 22500 so credit cash for 20000 is incorrect debit to accumulated depreciation 25000 is incorrect credit to loss on sale 2500 is incorrect because loss on sale should be debited