A company purchased ten delivery vehicles at a cost of $20000 each and used the group...
A company purchased ten delivery vehicles at a cost of
$20000 each and used the group depreciation method. which of the
following entries would be correct when recording the subsequent
sale of a vehicle for $8500( Group accumulated depreciation is
$88000)?
a. cash $8500, accumulated depreciation 8800, vehicles 17300.
b. cash $8500 ,vehicles 8500.
c. cash $8500, accumulated depreciation 8800, loss on sale 2700,
vehicles 20000
d.cash $8500, accumulated depreciation 11500, vehicles 20000.
Homework Answers
| Accumulated depreciation of one vehicle = Group accumulated depreciation / Total cars in group = 88000 / 10 | 8800 |
| Journal entry for sale : | ||
| Dr. | Cr. | |
| Cash | 8500 | |
| Accumulated depreciation | 8800 | |
| Loss on sale [ 20000 - 8500 - 8800 ] | 2700 | |
| Vehicles | 20000 | |
| Answer : Option C |
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