Question Content Area

Disposal of Fixed Asset

Perfect Auto Rentals sold one of its cars on January 1. Perfect had acquired the car 2 years earlier for $13,500. 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 had properly used the straight-line depreciation method in previous years.

Required:

Prepare the journal entry to record the sale of the car assuming the car sold for (a) $6,500 cash, (b) $4,000 cash, and (c) $6,700 cash. The company recorded the car as equipment. If an amount box does not require an entry, leave it blank.