Asset Disposal

Assume that Gonzalez Company purchased an asset on January 1, 2014, for $60,000. The asset had an estimated life of six years and an estimated residual value of $6,000. The company used the straight-line method to depreciate the asset.

Assume that Gonzalez Company sold the asset on July 1, 2016, and received $15,000 cash and a note for an additional $15,000.

Required:

1. Make the journal entry to record depreciation for 2016. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.

2. Record the sale of the asset. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.

Journal ubiec Date Description DebitCredit July Accumulated depreciation-asset = Accounts receivable Asset Cash Depreciation expense does this entry affect the a ement items by selecting" try (or no effect) on the fin