MoveIt 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 MoveIt sold a delivery truck for $26,000. MoveIt had originally purchased the truck for $43,000 and had recorded depreciation for three years. Prepare the journal entry to record the disposal of the truck, assuming that Accumulated Depreciation was (a) $17,000, (b) $12,000, and (c) $19,000. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1. No loss or No Gain

2. Loss = $5,000

3. Gain = $2,000

Explanation:

Requirement 1

If the accumulated depreciation of the machine was $17,000, the journal entry to record the transaction of disposal of machine will be as follows:

December 31   Cash                                       Debit        $26,000

                        Accumulated depreciation   Debit        $17,000

                        Machine                                      Credit        $43,000

Calculation:

Book value of the machine = Purchase price - Accumulated depreciation = $(43,000 - 17,000) = $26,000

We know, Gain (Loss) on sale of machine = Book value of the machine - Sale price = $(26,000 - 26,000) = $0. As the book value and the disposal value are same, there is no loss and no gain.

Requirement 2

If the accumulated depreciation of the machine was $12,000, the journal entry to record the transaction of disposal of machine will be as follows:

December 31   Cash                                       Debit       $26,000

                        Accumulated depreciation   Debit       $12,000

                        Loss on sale of equipment   Debit       $5,000

                        Machine                                      Credit        $43,000

Calculation:

Book value of the machine = Purchase price - Accumulated depreciation = $(43,000 - 12,000) = $31,000

We know, Loss on sale of machine = Sale price - Book value of the machine = $(31,000 - 26,000) = $5,000. Loss is a debit as it shows as the expense.

Requirement 3

If the accumulated depreciation of the machine was $19,000, the journal entry to record the transaction of disposal of machine will be as follows:

December 31   Cash                                Debit        $26,000

                 Accumulated depreciation   Debit        $19,000

                 Gain on sale of machine            Credit               $2,000

                 Machine                                      Credit              $43,000

Calculation:

Book value of the machine = Purchase price - Accumulated depreciation = $(43,000 - 19,000) = $24,000

We know, Gain on sale of machine = Sale price - Book value of the machine = $(26,000 - 24,000) = $2,000. Gain is a credit as it shows as the income.

answer utilities; more money you have to pay out ; )