Question

On December 29, 2019, Patel Products, Inc., sells a delivery van that cost $20,000. After recording the entry to bring the accumulated depreciation up-to-date, the delivery van had accumulated depreciation of $18,000. Patel received $2,000 cash from the purchaser of the delivery van.
Prepare the journal entry to record sales.

Answer 1

Answer: Please see explanation column for explanation

Explanation:

preparing a journal account for Patel Products which sells a van that cost $20,000 and accumulated depreciation of $18,000,  also receiving cash of $2000 from the purchaser, we have that:

December 29, 2019

Account title-----   Cash----------Debit $2,000

Account title----Accumulated Depreciation-----Debit  $18,000.

Account title------Delivery Van ----Credit $20,000

The book value of the equipment at the time of the sale was $2,000 or the cost of $20,000 with updated accumulated depreciation of $18,000. Because Patel received  same $2,000 cash from the purchaser of the delivery van, there is no gain on the disposal of the equipment.