Abbott Landscaping purchased a tractor at a cost of $39,000 and sold it three years later for $19,800. 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. 2. Assume the tractor was sold for $12,400 instead of $19,800. Record the sale.

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Oneill

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23 May, 07:55

Abbott Landscaping purchased a tractor at a cost of $39,000 and sold it three years later for $19,800. 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. 2. Assume the tractor was sold for $12,400 instead of $19,800. Record the sale.

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Marcelo Booth · Answer 1

The journal entry is as follows:

Cash A/c Dr. $12,400

Accumulated Depreciation - Equipment A/c Dr. $21,900

Loss on sale of equipment A/c Dr. $4,700

To Equipment $39,000

(To record the sale)

Working notes:

Accumulated Depreciation - Equipment:

= [ (Cost of tractor - Residual value) : Service life] * No. of years

= [ (39,000 - 2,500) : 5] * 3

= $21,900