Question

Funseth Farms Inc. purchased a tractor in 2013 at a cost of $30,000. The tractor was sold for $3,000 in 2016. Depreciation recorded through the disposal date totaled $26,000. Required: 1. Prepare the journal entry to record the sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer:

Explanation:

The journal entry is shown below:      

Cash or Bank A/c Dr. $3,000

Loss on sale of Tractor A/c Dr. $1,000

                    To Tractor A/c  $4,000     ($30,000 - $26,000)

(Being the sale of a tractor is recorded)

We know that

The book value = Purchase value of tractor - accumulated depreciation

                        = $30,000 - $26,000

                        = $4,000

And, the sale value of a tractor is $3,000

So, it would be a loss of $1,000