Trump Entertainment Resorts owns and manages three casino hotel properties, Trump Plaza Hotel and Casino, Trump Taj Mahal Casino Resort, and Trump Marina Hotel Casino, totaling over $1.5 billion in property and equipment. Assume that Trump replaced furniture in one of the hotels that had been used in the business for five years. The records of the company reflected the following regarding the sale of the existing furniture:
Furniture (cost) .......... $8,000,000
Accumulated depreciation ...... 6,500,000
Required:
1. Give the journal entry for the disposal of the furniture, assuming that it was sold for
a. $1,500,000 cash.
b. $2,600,000 cash.
c. $900,000 cash.
2. Based on the three preceding situations, explain the effects of the disposal of an asset.