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Disposal of Fixed Asset Perfect Auto Rentals sold one of its cars on January 1, 2019. Perfect had acquired the car on January 1, 2017, for $23,400. At acquisition Perfect assumed that the car would have an estimated life of 3 years and a residual value of $3,000. Assume that Perfect has recorded straight-line depreciation expense for 2017 and 2018. Required: 1. Prepare the journal entry to record the sale of the car assuming the car sold for (a) $9,800 cash. (b) $7,500 cash, and (c) $11,500 cash. 2. How should the gain or loss on the disposition (if any) be reported on the income statement?

BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter 7, Problem 58E
Textbook Problem

Disposal of Fixed Asset

Perfect Auto Rentals sold one of its cars on January 1, 2019. Perfect had acquired the car on January 1, 2017, for $23,400. At acquisition Perfect assumed that the car would have an estimated life of 3 years and a residual value of $3,000. Assume that Perfect has recorded straight-line depreciation expense for 2017 and 2018.

Required:

1. Prepare the journal entry to record the sale of the car assuming the car sold for (a) $9,800 cash. (b) $7,500 cash, and (c) $11,500 cash.

2. How should the gain or loss on the disposition (if any) be reported on the income statement?

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Chapter 7 Solutions

Cornerstones of Financial Accounting
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