On January 1, 2014, Skyline Limousine Co. purchased a limousine at an acquisition cost of $28,000. Skyline depreciated the vehicle by the straight-line method using a 4-year service life and a $4,000 salvage value. The company’s fiscal year ends on December 31.

INSTRUCTIONS Prepare the journal entry or entries to record the disposal of the limousine, assuming that it was:

(a) Retired and scrapped with no salvage value on January 1, 2018.

(b) Sold for $5,000 on July 1, 2017.