Question
The following information applies to questions 7 9: A truck that cost $18,000 and on which $16,000 of accumulated depreciation has been recorded was sold
The following information applies to questions 7 9:
A truck that cost $18,000 and on which $16,000 of accumulated depreciation has been recorded was sold on January 1, the first day of the year.
7. Assume the truck was sold for $2,500 cash. The entry to record the sale would include:
a. a credit to the Accumulated Depreciation account for $16,000 | ||
b. a debit to Gain on Disposal of $500 | ||
c. a credit to the Truck account for $18,000 | ||
d. a credit to Cash for $2,500 |
8. Assume the truck was sold for $1,500 cash. The entry to record the sale would include:
a. a debit to the Accumulated Depreciation account for $2,000 | ||
b. a credit to Cash for $1,500 | ||
c. a debit to Loss on Disposal of $500 | ||
d. a debit to the Truck account for $18,000 |
9. Assume the truck was traded for new equipment valued at $10,000 and that a $2,200 trade-in allowance was given for the old truck. The entry to record the exchange would include:
a. a credit to the Truck account for $2,200 | ||
b. a credit to the Equipment account for $10,000 | ||
c. a debit to Loss on Disposal for $200 | ||
d. a credit to Cash for $7,800 |
12. Jones Co. borrows $30,000 from the bank at 9% interest on August 31. Jones' journal entry to record accrued interest on the note on September 30 would include (use a 365-day year):
a. a debit to Interest Expense for $221.92 | ||
b. a credit to Interest Revenue for $225.00 | ||
c. a debit to interest Receivable for $225.00 | ||
d. a debit to Interest Payable for $221.92 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started