Question

Problem IV: On 1/1/X1, Wolfpack Creamery sold one of its ice cream trucks for $35,000 cash. Just prior to its sale, the "Truck" asset account had a normal account balance of $60,000 and its related "Accumulated Depreciation" account had a normal account balance of $28,000. A. Compute the amount of gain or loss on the sale by comparing the book value of the sold asset to the cash received. Amount: _$____35000___ Cash received 3500 Book value of asset given up 32000 Gain/Loss on Sale 3000

Answer 1

Gain on disposal 3,000

Step-by-step explanation:

purchase cost 60,000

accumulated deprecation (28,000)

book value 32,000

sales value: 35,000

gain on disposal: 3,000

As we sale for a higher price than book value we recognzie an accounting gain for 3,000