Melanie works for a company that wants to sell their truck today. Melanie is confused about how to calculate gain or loss on the sale of a business vehicle. Her company got an offer to buy their business truck for $5,000. The equipment is on their books at $35,000 with related accumulated depreciation at 29,000. The company still needs to record depreciation on this equipment for the period just expired. Depreciation expense will be recorded at $1,500.

Help Melanie give her company the correct answer to the following questions.

9a) If the company sells the truck for $5,000 now, what will be the gain or loss on this sale? Provide the journal entry. Why is this a gain or a loss (what determines whether there is a gain or loss)?

9b) If the circumstances change and the company has a total of $28,000 in accumulated depreciation, what would be the gain or loss on the sale assuming they are receiving the same proceeds for this sale? Provide the journal entry. Why is this a gain or a loss?